For QE31/12/2020, EForce's net profit rose 48% q-o-q or 142% y-o-y to RM3.9 million while revenue rose 3% q-o-q or 59% y-o-y to RM9.2 million. Revenue grew steadily due to "continuing interest of retail investors in Bursa securities sustained the overall high daily trading volume in quarter 4. Hence the sustained growth in our increase in Application Services Providers (“ASP”) revenue. However, our Application Solution (AS) segment performance was flat to last year. System enhancement project implementations resumed earnestly in this quarter, and billings for work done expected next year."
As at 31/12/2020, EForce's financial position is deemed very healthy with current ratio at 5.7 times. The company has cash balance of RM22.9 million (or equivalent to 3.7 sen per share). It has no borrowing.
EForce (closed at RM0.46 yesterday) is now trading at a PE of 24 times (based on last 4 quarters' EPS of 1.90 sen). Based on this PE ratio, EForce is deemed fairly valued.
EForce is trading not far from the line connecting the last 5 years' lows (excluding the Mar 2020 extreme low) at RM0.40-0.42. If we drew a line connecting all the lows (including the Mar 2020 extreme low), that baseline will act as support at RM0.25. At this moment, there is no sign that EForce share price is poised for an upside move.
Chart: EForce's monthly chart as at Feb 24, 2021 (Source: Malaysiastock.biz)
Based on improved financial performance, good financial position & reasonable valuation, EForce is a good stock for long term investment.
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