GTRONIC – Fundamental Analysis (11 May 2015)

GTRONIC Analysis:-

Excel –

Notes –

My View:-

  • Valuation
    • 5Y DCF
      • Good Scenario: 5.18 (Fair value uncertainty: VERY HIGH)
      • Base Scenario: 4.58 (Fair value uncertainty: EXTREME)
      • Bad Scenario: 4.06 (Fair value uncertainty: EXTREME)
      • Ugly Scenario: 3.59 (Fair value uncertainty: EXTREME)
      • At current price (5.79), based on RDCF, assumption of FCFF growth rate in the next 5 years is 19.7%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.229) – Fair value 3.36 (Fair Value Uncertainty: EXTREME)
        • R4Q (EPS: 0.24) – Fair value 3.51 (Fair Value Uncertainty: EXTREME)
      • Forward:
        • FY15 (EPS: 0.283) – Fair value 4.14 (Fair Value Uncertainty: EXTREME)
        • FY16 (EPS: 0.378) – Fair value 5.53 (Fair Value Uncertainty: VERY HIGH)
      • EPS applied to reach the current stock price (5.79): 0.395
  • GTRONIC reported FY15Q1 earnings of RM17.1m, an increase of +21.6% yoy
    • The improvement in earnings was mainly attributable to:
      • Higher volume loadings from most of the group’s customers;
      • Better economies of scale
      • Productivity improvement and cost control programme
    • Segment profit from Singapore increased by +155.9%yoy to RM7.4m, outperforming the other segments. The increase in profitability was underpinned by stronger sales contribution which grew by approximately +50%yoy to RM37.1m. In addition, the profit margin from the segment also expanded to 19.9% from 11.7% previously, partly due to better economies of scale.
  • GTRONIC shows its ability to keep pace with the market demand by strategically positioning itself within the value chain. This has translated into steady earnings growth. At present, the group has identified the sensor business as the catalyst of growth.
  • GTRONIC has been consistently delivering steady earnings growth by keeping pace with market demands. This was shown in its latest quarterly results announcement. With a growing cash pile, the company mostly will continue its attractive dividend payouts. I believe that there is still slight room for the stock to appreciate further with expectation on another solid year ahead in FY15.
  • Dividend Yield is around 4%, not bad. However, valuation wise, GTRONIC is not attractive.

Latest Financial – Q1 2015 Financial Report (28 Apr 2015)

At the time of writing, I did not own shares of GTRONIC.

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