DUFU: Earning Soared

Result Update

For QE30/6/2018, Dufu's net profit rose 105% q-o-q or 72% y-o-y to RM12 million while revenue rose 11% q-o-q or 43% y-o-y to RM59 million. Revenue rose strongly q-o-q due to the strong demand in the HDD segment and together with the favorable USD exchange rates against MYR also attributed to the increase in profit before tax.


Table: Dufu's last 8 quarterly result


Graph: Dufu's last 20 quarterly result

Financial Position

Dufu's financial position as at 30/6/2018 is deemed healthy. Its current ratio and gearing ratio stood at 3.6 times and 0.3 times respectively.

Valuation

Dufu (closed at RM1.62 yesterday) is now trading at a trailing PER of 8.8x (based on last 4 quarters' EPS of 18.4 sen). At this PER, Dufu is deemed fairly attractive.

Technical Outlook

Dufu broke above its downtrend line, RR at RM1.05 in mid-July. The stock has been rallying higher ever since the bullish breakout. It may soon test the May 2017 high of RM1.65. To go higher, Dufu must break above this level. We will have to wait and see whether it can do so.


Chart 1: Dufu's weekly chart as at Aug 7, 2018 (Source: ShareInvestor)


Chart 2: Dufu's monthly chart as at Aug 7, 2018 (Source: ShareInvestor)

Conclusion

Based on good financial performance, healthy financial position and fairly attractive valuation, Dufu is a good stock for long-term investment. However the share price may be due for some correction after its recent sharp rally. It will be safer to buy on weakness than to charge in right now.

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.