Gtronic: Top-line and bottom-line plummeted2nd May 2019
For QE31/3/2019, Gtronic’s net profit plummeted 86% q-o-q or 80% y-o-y to RM3.1 million due to sharp drop in revenue of 46% q-o-q or 49% y-o-y to RM44 million. The big drop in revenue and profits was due to the continuing global slowdown affecting the industry which caused volume loadings to drop drastically. In addition, there were unexpected measures taken by certain customers to stop shipments towards the end of March 2019 due to their desire to deplete their inventories in the supply chain.
Table: Gtronic’s last 8 quarterly results
Graph: Gtronic’s last 53 quarterly results
Despite the weaker performance, Gtronic’s financial position is still very healthy with current ratio at 3.8 times and gearing ratio at 0.17 time.
Gtronic (closed at RM1.90 yesterday) is now trading at a PE of 22 times (based on last 4 quarters’ EPS of 8.69 sen). At this elevated PER, Gtronic is deemed overvalued.
Gtronic has risen off its low at RM1.39 recorded in January this year. The share price rallied twice but failed to test the 200-day SMA line. With the poor result, Gtronic is likely to fall back to test its medium-term uptrend line with support at RM1.77.
Chart 1: Gtronic’s daily chart as at Apr 30, 2019 (Source: Malaysiastock.biz)
Chart 2: Gtronic’s weekly chart as at Apr 30, 2019 (Source: Malaysiastock.biz)
Based on poor financial performance and demanding valuation, I revise my rating for Gtronic to a HOLD.
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