Penta: Bottom-line soared

Results Update

For QE30/6/2015, Penta's net profit increased by 86% q-o-q or 102% y-o-y to RM3.3 million while revenue was mixed- up 24% q-o-q but down 10% y-o-y to RM24 million.   The higher sequential revenue  recorded  was  due  to  the increase in  sales from  the  automated equipment  operating  segment which  was partially offset  by  the drop  in revenue contribution from  the  automated manufacturing  solution  operating  segment. Consequently, the  Group achieved a higher profit before  tax  of RM4.0 million as compared to RM1.4 million in the preceding quarter.


Table: Penta's last 11 quarterly results (Source: ShareInvestor.com)
 
 
Chart 1: Penta's last 11 quarterly results (Source: ShareInvestor.com)

 Valuation

Penta (closed at RM0.865 yesterday) is now trading at a PER of 12.7 times (based on last 4 quarters' EPS of 6.8 sen).  At this PER, Penta is deemed fully valued. However, if Penta can sustain its earning based on latest quarterly EPS, then its full year EPS could be 9.8 sen. This will push down PER to 8.8 times; giving room for a potential 20-30% price gain.

Technical Outlook

Penta broke above its horizontal line at RM0.85. Its next resistance will be at the psychological RM1.00 mark and beyond that, at RM1.40.

Chart 2: Penta's monthly chart as at July 30, 2015 (Source: ShareInvestor)

Conclusion

Based on good financial performance, reasonable valuation and positive technical outlook, Penta could be a good stock for a medium-term investment. (For more on Penta, go here)

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, Penta.