Not sure why the share price went up substantially from only 12 sen to more than 30 sens at the end of March. The only thing that I can see that might be the reason for the sudden price increase is the appointment of Mirzan Mahathir (Tun M’s son) as one of its independent directors (he has no direct or indirect exposure in the company). Investors might be hoping for some contract awards to the company which is just speculative in nature at the moment.
Looking at the company’s fundamental, it has been recording losses to its shareholders since FY14. FY19 looks more likely to end in the red as well.
However, what is more worrying is its weak balance sheet. As of Dec 18, the company only has RM20k in cash and an immediate debt obligation of more than RM16mil. Current liabilities of RM45.4mil are a lot higher than the current assets of only RM22.9mil. The company would most probably need to raised more capital soon to help strengthen its balance sheet.
If you are looking to hedge your portfolio outside of Gets Global (due to its weak earnings outlook and liquidity issues), I would recommend you to look at MBMR. (https://klse.i3investor.com/servlets/stk/pt/5983.jsp)
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 7.0x PE based on FY18 profit of RM166mil. PB is low at only 0.7x BV.
FY19 should deliver another profit growth year to the company. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).
MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.8x which is a lot lower than the industry average of 15x PE. As an example, UMW (another company with exposure to Perodua) is currently trading at a PE multiple of almost 20x.
Good company. The administrative expenses dropped tremendously qoq ie from RM 4.99 M to only RM 1.55 M. The revenue qoq also increased by 30 % ie from RM 5.377 M to RM 6.952 M
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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Posted by 430204813832245 > 2019-04-15 14:04 | Report Abuse
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