Vitrox- Recovery shall begin?

Background

ViTrox Corporation Berhad ('Vitrox') is involved in the design, manufacture, and marketing of automated vision inspection systems and system-on-chip embedded electronics devices to semiconductor and electronic packaging industries. Among its solutions are:

• Back-end Semiconductor
• PCB SMT Assembly & Bare Board
• Electronic Communication System

Recent Financial Results

For QE30/9/2013, Vitrox's net profit soared 83% q-o-q or 189% y-o-y to RM11.9 million while revenue increased by 28% q-o-q or 52% y-o-y to RM36 million. The company attributed the improved financial performance to "increase in sales recorded for ABI. Increase in sales recorded for ABI was mainly derived from positive acceptance of our Advanced X-ray Inspection System. Sales from ABI have recorded an increase of 98% against the immediate preceding quarter".


Table: Vitrox's last 8 quarterly results

Vitrox had a volatile financial performance over the past 2 years. That may reflect the uncertainties in the electronic industries during the period.


Chart 1: Vitrox's last 4 quarterly results

Financial Position

As at 30/9/2013, Vitrox's financial position is deemed satisfactory, with current ratio at 6 times and debts to equity ratio at a negligible 0.1 time.

Valuation

Vitrox (closed at RM0.99 yesterday) is now trading at a PE of 9 times (based on last 4 quarters' EPS of 11.4 sen). At this PE multiple, Vitrox is deemed fairly valued.

Technical Outlook

Vitrox has formed a base between RM0.60-080 over the past 2 years. Over the past 4 weeks, it broke above the horizontal line at RM0.85 and it has just broken above the horizontal line RM1.00 this morning. If it can stay above the RM1.00 mark, this stock could begin its next upleg.


Chart 2: Vitrox's weekly chart as at Nov 21, 2013 (Source: Quickcharts)

Conclusion

Based on improving financial performance, good financial position & bullish technical outlook, AHealth Vitrox could be both a trading BUY and a good stock for long-term investment. However, it is fairly valued and its upside may be limited, unless its top-line & bottom-line expand substantially.

 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,Vitrox.