We expect Elsoft to see muted earnings in FY20 mainly due to disruptions to its operations during the MCO in Malaysia and lockdowns abroad. That said, we expect the group to deliver improved earnings in 2HFY20, driven by the order backlog from 1HFY20. Notwithstanding, we remain sanguine on the group’s prospects underpinned by continued research and development in its core areas, namely automotive and smart devices. Its upcoming series of ATE include automotive headlamp tester catered to multibeam headlamps and smart devices LED flash tester designed for the next evolution of smartphone flash module. In all, we maintain our Buy recommendation on Elsoft with an upgrade TP of RM0.85 based on a PE multiple of 17.0x against CY21 EPS. Key include: i) more orders from ev cars and smart phone company, ii) multinational company, and iii) evolution of new products acceptance by new customers. with this all in setup, we expected elsoft return from black in 1H2021.
1) Good cash balance, no debt. 2) In technology sector, probably the best industry to be in.
3) Highly dependent on one customer in China, even thought they have 15 years of relationship, the recent disruption in supply to China might be making their customer in China look for a more secure supplier in their local region. If ELSOFT loses this customer then ELSOFT will lose more than half of its revenue.
4) ELSOFT is looking for other customers, but this should had be done since the start instead of starting during pandemic, this shows bad planning by them.
5) ENTOPIA, a butterfly farm in Penang, under ELSOFT, is making losses for four years now, since its inception, and its bound to get worst. Plus, the business of ENTOPIA is very different from ELSOFT, why acquire it? and have you been to ENTOPIA? I have, its really not worth the ticket price for me, the insect farm in Cameron highland provides more attraction at 1/3 of the price , and there's no crowd at ENTOPIA.
6) Now the revenue, profit, margins, all similar to back then in 2013. But back then in 2013 the share price were RM0.20 , now its RM0.60 above. So it is worth the risk to pay RM0.60?
The share price could slowly plunge until it is profitable, which even the company doesn't know when and is struggling.
This is just my opinion, as I like to write about it before I make any decisions. Happy investing guys
Just my two-cents on Elsoft, the business is heavily dependent on one customer which is a serious problem but apart from that, the business looks good with a health balance sheet and a strong competitive edge.
Might be worth a second look and weigh in on the risk of single customer concentration.
Trend is looked good. White candle push up with high volume on last week and pull back with low volume. Should be time to go uptrend. Wish Elsoft perform well and come with white candle w/high volume again. Cheer
Elsoft is waiting time to uptrend. Chart is consolidate and will trade uptrend if buyer step in again with high volume and long candle. We will keep eye on it and hope will not fail us. Cheer to Elsoft.
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Posted by i3investorforum > 2020-08-26 18:12 | Report Abuse
Why lagging lo?