PENTA: Earnings Continued to Grow

Results Update

For QE31/3/2018, Penta's PBT increased by 23% q-o-q or 76% y-o-y to RM16.5 million while revenue rose 1% q-o-q or 109% y-o-y to RM99 million.

Revenue rose marginally q-o-q mainly due to increase in sales from automated equipment. Taking into account the non-recurring expenses of RM7.1 million, the Group recorded a profit before taxation of RM16.5 million in the current quarter. Should the effects of the non-recurring expenses be excluded, the Group would have exhibited a profit before taxation of RM23.6 million which is RM7.1 million or approximately 42.9% higher than the adjusted profit before taxation of RM16.5 million achieved in the preceding quarter. Profit before taxation increased by 42.9% as compared to the lower increase in revenue of 0.9%, mainly due to better margin secured from projects delivered to customers and higher gain from changes in fair value of the foreign currency forward contracts in the current quarter.


Table: Penta's last 8 quarterly results

 
Graph: Penta's last 21 quarterly results 

Valuation

Penta (closed at RM2.31 yesterday) is now trading at a PER of 21 times (based on last 4 quarters' EPS of 11.24 sen). Based on the earning growth of 14% last year, Penta's PEG ratio of 1.5 times is deemed reasonable.

Technical Outlook

Penta broke above its downtrend line, SS at RM2.10 in May. It may begin its next upleg soon. Immediate support & resistance are at RM2.20 & RM2.40 respectively.


Chart: Penta's weekly chart as at May 22, 2018 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, reasonable valuation and mildly positive technical outlook, Penta is a good stock for long-term investment.

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.