VS: Top-line & bottom-line continue to rise

Result Update

For QE31/7/2013, VS's net profit increased more than 8-fold q-o-q but rose less than 1% y-o-y to RM36 million while revenue was up 42% q-o-q or 49% y-o-y to RM534 million. Pre-tax profit was mixed; up more than 4-fold q-o-q but down 45% y-o-y to RM21 million. Pre-tax profit jumped q-o-q mainly attributable to higher sales generated by the Malaysian operations compared to the preceding quarter coupled with improved gross profit margin resulting from improved sales mix for the Malaysian operations. For QE31/7/2014, VS's net profit was given a bump up from tax credit due to the recognition of tax incentive in relation to the enhanced export incentive.


Table 2: VS's last 8 quarterly results


Chart 1: VS's last 38 quarterly results

Valuation

VS (closed at RM2.59 yesterday) is trading at a trailing PE of 8.9 times (based on last 4 quarters' EPS of 29 sen). At this multiple, VS is deemed relatively attractive.

Technical Outlook

VS is a strong uptrend. This exponential rise -not unlike what was witnessed in 2006/2007- might just happen again, with a test of the 2007 high of RM3.30. However, it must be noted that a stock that rose sharply would be prone to sharp correction too.


Chart 2: VS's weekly chart as at Sep 30, 2014 (Source: Tradesignum)


Chart 3: VS's monthly chart as at Sep 30, 2014 (Source: Equities Tracker)

Conclusion

Based good financial performance, fairly attractive valuation and bullish technical outlook, VS is a good stock for medium-term investment (by buying on weakness).

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, VS.