Thursday, 8 May 2014

Gtronic's Billion Ringgit Dream

I think that most true investors of Globetronics might have read a Chinese article in Nanyang by "Cold Eye" Fong Siling, 

"Globetronics's Billion Ringgit Dream"

This article was published a little more than a year ago in January 2013. At that time, Gtronic's share price was about RM1.70.

In its FY2011 annual report, Gtronic's founder & executive chairman Mr Michael Ng Kweng Chong mentioned that the company targeted to be a billion-ringgit company by year 2016.

       From Annual Report 2011

Now in 7th May 2014, Gtronic's share price closed at RM3.66. Base on its paid-up shares of 281 million, its market cap has reached RM1.028 billion.

So, Gtronic has achieved its target 2 years earlier. Is it because the share price is at unrealistically high level?

Its FY13 net profit is RM52.6mil, with EPS of 18.7sen. So current PE stands at 19.6x. It is definitely not undervalued.

However, its dividend yield is still great at 5% because of generous dividend payout of 60-80%.

This company is all about good management, good dividend and good future growth.

All the while the management is talking about its huge growth potential from the second half of FY2014. I'm anticipating this impatiently.

The key to Gtronic's success in the past few years might be closely related to its CEO Mr Heng Huck Lee. We can see how Mr Heng is highly rated by his chairman in the latest FY13 annual report.

       From Annual Report 2013

Even though at this record breaking level, Gtronic will still allocate a high sum of capex of RM50mil for FY14. This may give some clue to the demand of its products and growth potential of the company.

Gtronic always look ahead to plan for the next 5 years' business roadmap, to tap into the growth area and fence off competition by creating and producing products for tomorrow's market need.

With this, I think I should hold Gtronic's shares for long term until its business drops sharply or the market crash, or may be when Mr Heng quits.

No comments:

Post a Comment