EForce- rating downgraded to HOLD

Result Update

For QE30/9/2012, EForce's net profit dropped by 72% q-o-q or 63% y-o-y to RM569k while revenue was mixed- dropped by 27% q-o-q but rose 11% y-o-y to RM3.7 million. Net profit dropped q-o-q due to the expiry of pioneer tax status, lower sales generated by the Application Solutions (AS) business, higher operating and personnel expenses.


Table 1: EForce's last 8 quarterly results


Chart 1: EForce's last 19 quarterly results 

Valuation

EForce (closed at RM0.29 at the end of the morning session) is now trading at a PE of 10 times (based on last 4 quarters' EPS of 2.9 sen). At this PE, EForce is deemed fully valued.

Technical outlook

EForce is now trapped in a triangle. Since the stock has traded to the apex of that triangle, a 'breakout' would not be very significant. The likely price direction is sideway and then range-bound trading between RM0.23 & RM0.33.


Chart 2: EForce's weekly chart as at Nov 26, 2012_11am (Source: Quickcharts)

Conclsuion

Based on poorer financial performance, full valuation & uncertain technical outlook, EForce's rating is now revised to a HOLD.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, EForce.