FPI: Bullish Breakout

Background

Formosa Prosonic Industries Bhd ('FPI') is involved in the manufacture and sales of wireless speaker products, conventional speaker products, musical instrument products and acoustic products.

Recent Financial Performance

For QE30/9/2018, FPI's net profit rose 134% q-o-q or 14% y-o-y to RM16.7 million while revenue rose 57% q-o-q or 25% y-o-y to RM192 million. Revenue increased mainly due to higher sales volume and change in sales mix. These, in addition to stronger USD exchange rate against MYR and more effective material sourcing, had resulted in a jump in net profit to RM16.7 million. The result for QE30/9/2018 was announced on 15 November 2018. The next quarterly result will be announced in the last week of this month.


Table: FPI's last 8 quarterly results

You can see that quarterly revenue and profits are at the high for the past 14 quarters.


Graph: FPI's last 14 quarterly results

Financial Position

As at 30/9/2018, FPS's financial position is deemed healthy with current ratio at 2.1 times and total liabilities to total equity of 0.6 time.

Valuation

FPI (closed at RM2.02 yesterday) is now trading at a trailing PER of 14.6 times (based on last 4 quarters' EPS totaling 13.8 sen). At this PER, FPI is deemed fairly attractive.

Technical Outlook

FPI broke above the line connecting the recent high at RM1.90 yesterday. In addition, it broke above the psychological RM2.00 mark.


Chart: FPI's daily chart as at Feb 13, 2019 (Source: Malaysiastock.biz

Conclusion

Based on improved financial performance, strong financial position, attractive valuation & bullish technical outlook, FPI is a very good stock to consider 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.