Notion: Returned to profit, for now

Results Update

For QE30/6/2015, Notion returned to profitability with a net profit of RM7.3 million as compared to a net loss of RM4.5 million in the immediate preceding quarter. Revenue dropped 3% q-o-q to RM62 million.

The improved performance was due to increased operating  profit, attributable to higher average selling price - arising from the continued strength of the USD against the Ringgit. More importantly, the Group recorded an extraordinary gain of RM 8.9 million arising from the sale of a factory building and land - which enabled it to achieve a PBT of RM15.0 million.

 
Table: Notion's last 8 quarterly results


Chart 1: Notion's last 35 quarterly results

Valuation

Notion (closed at RM0.44 yesterday) is now trading at a PBR of 0.4 time. I am unable to compute a PER for Notion as it is not profitable in the last 4 quarters (combined). I have serious doubt that this group can operate profitably in the future, given its poor track record in the past few quarters. It took an extraordinary gain & a sharp drop in the Ringgit to help it to return to the black. One cannot count on these favorable factors all the times.

Technical Outlook

Notion has been declining for the past 2-3 years after it broke its support at RM0.75-0.80 (here).


Chart 2: Notion's weekly chart as at Aug 20, 2015 (Source: ShareInvestor.com)

Conclusion

Based on uncertain financial performance & negative technical outlook, Notion is a stock to be avoided.

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, Notion.