Gtronic: Bottom-line improved

Result Update

For QE30/6/2014, Gtronic's net profit increased by 12% q-o-q or 22% y-o-y to RM17 million while revenue was mixed- down 1% q-o-q but rose 6% y-o-y to RM89 million. The higher net profit achieved was mainly due to higher volume loadings from most of the Group's customers, better economy of scale coupled with productivity improvement/cost control program carried out in the Group.

Gtronic is optimistic of achieving satisfactory performance in financial year 2015 by focusing on "escalating up the value chain and riding on the R&D initiatives in new products’ design and development (and) improving the efficiency and cost reduction measures in its Group’s operations to achieve the necessary competitive edge in the market".


Table 1: Gtronic's last 8 quarterly results


Chart 1: Gtronic's last 33 quarterly results
  
Valuation 

Gtronic (closed at RM6.09 yesterday) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 24 sen). At that PE multiple, Gtronic is deemed fairly valued.

Technical Outlook

Gtronic has been in a steady uptrend over the past 3 years- surpassing its recent high as well as its 2000 high.


Chart 2: Unisem's monthly chart as at Apr 28, 2015 (Source: ShareInvestor.com)

However, I believe the stock has reached its target price in the current move. On weakness, the RM5.00 horizontal line should be a good support. 


  Chart 3: Unisem's weekly chart as at Apr 28, 2015 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance & positive technical outlook, Gtronic remains a good stock for long-term investment. Its upside potential is limited as it is trading at fair valuation.

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.