GDEX: Earning Dropped After The Festive Seasons

Recent Results

For QE31/3/2017, GDEX's net profit dropped 13% q-o-q but rose 9% y-o-y to RM8 million while revenue dropped 7% q-o-q but rose 14% y-o-y to RM61 million. Profits dropped q-o-q mainly due to decline in sales performance as a result of lesser e-commerce shipments after the festive season. At the same time, the Group reported increase in operating costs related to manpower, rental expenses and supplies costs on the back of business expansion and growth in e-commerce business transactions. Sales dropped q-o-q mainly due to lower e-commerce transactions after the festive season, as compared to immediate preceding quarter.


Table: GDEX's last 8 quarterly results

 
Graph: GDEX's last 33 quarterly results
 
Valuation

GDEX (closed at RM3.03 yesterday) commands a PER of 109 times (based on last 4 quarters' EPS of 2.78 sen). At this high PER, GDEX is very expensive.

Technical Outlook

GDEX had a scorching run after it broke above its horizontal line at RM1.80 in March this year. This came on the heel of its proposal for a 3-to-1 bonus (here). The ex-date has now been fixed at June 7 (here). The near-vertical rally is crazy & unsustainable.


Chart 1: GDEX's monthly chart as at May 23, 2017 (Source: ShareInvestor.com)


Chart 2: GDEX's daily chart as at May 23, 2017 (Source: ShareInvestor.com)
 
Conclusion

Despite the good financial performance & exciting prospect of the e-commerce sector, GDEX's high valuation is simply hard to justified. I recommend a SELL INTO STRENGTH.

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.