Gtronic- Uptrend to continue

Technical Outlook

Gtronic broke above its horizontal resistance at RM2.20 on Monday. With this upside breakout, Gtronic is continuing on its uptrend.


Chart 1: Gtronic's daily chart as at July 4, 2013_9.15am (Source: Quickcharts)

Recent Financial Result

Gtronic's financial performance is deemed satisfactory for the past few quarters, albeit a dip in both top-line and bottom-line in QE31/3/2013. The profit margin at 13-14% is very encouraging as the company is deriving more businesses from the manufacture and sales of chip carrier quartz crystal products and optoelectronic products which carry higher profit margin.


Table 1: Gtronic's last 8 quarterly results

 
Chart 1: Gtronic's last 25 quarterly results

Valuation

Gtronic (closed at RM2.32 yesterday) is now trading at a PE of 13.6 times (based on last 4 quarters' EPS of 17 sen). At that PE mulitple, Gtronic is deemed fairly valued.

Conclusion

Based on good financial performance, Gtronic could be a good stock for long-term investment. Its upside potential is limited as it is trading at fair valuation. However, its technical outlook is bullish and that may justify a rating of a trading BUY for now.


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, Gtronic.