RGB: Earnings Continued To Rise

Result Update

For QE30/9/2016, RGB's net profit rose 34% q-o-q or 63% y-o-y to RM9.3 million while revenue rose 63% q-o-q or 19% y-o-y to RM95 million. Revenue increased q-o-q due to higher revenue from Sales & Marketing (SSM) division while revenue from Technical Support & Management (TSM) division was unchanged. PBT rose q-o-q due to higher profit from SSM division (an increase of RM3 million) which more than offset the drop in PBT for TSM division (of RM0.4 million) as well as forex losses of RM0.9 million.


Table: RGB's last 8 quarters' P&L


Chart 1: RGB's last 13 quarters' P&L

Valuation

RGB (closed at RM0.235 yesterday) is now trading at a PER of 12x (based on last 4 quarters' adjusted EPS of 2 sen). Based on CAGR of 25% over the past 2 years, PEG ratio is still comfortably below 1x. At this PER & PEG ratio, RGB is deemed attractively valued.
  
Technical Outlook

RGB broke above its saucer bottom at RM0.20. After a strong rally to RM0.27, RGB may be due for a bit of correction. As long as it stays above RM0.20, the stock has a chance to go higher.


Chart 2: RGB's monthly chart as at Nov 30, 2016 (Source: ShareInvestor)
 

Chart 2: RGB's daily chart as at Dec 1, 2016 (Source: ShareInvestor)
 
Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, RGB is rated a BUY.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.