Wednesday, 12 November 2014

GDEX: Still Got Upside?

If you buy & keep GDEX since early 2013, its share price has appreciated about 3x in less than 2 years with a bonus issue in between.

With rapid increasing popularity of online business & shopping in Malaysia, I am quite sure that in the near future GDEX's revenue only has one direction, which is up.

Furthermore, it is linked with Singapore Post and Alibaba!

For its FY14 which ends in Jun14, GDEX posts a record PATAMI of RM23.9mil. It is a superb 76% improvement YoY.

Its share price is currently trading at around RM2.09. With total paid-up shares of 840.7mil, EPS is at 2.8sen.

So current PE ratio of GDEX is 75x!

It still has 92.5mil warrants which are going to expire in Feb16.

RHB has just started coverage on GDEX today. It gives it a target price of RM2.42 which is DCF-derived (discounted cash flow). This represents a whopping PE of 81x base on FY15 earning forecast!

RHB's FY17 EPS forecast for GDEX is only at 5sen per share...

       RHB coverage on GDEX

I wish that one of the stocks in my portfolio can be given such high PE ratio base on whatever valuation methods. Probably I'll be very rich by then.

There is no doubt that GDEX is a well-managed company in a right industry at the moment. It has great potential for growth and its future is bright.

It plans to expand its business to ASEAN region and this may boost its profit significantly if successful.

Would it be easy to penetrate into other countries?

Personally I think courier service is not a business with high barrier of entry. Competition will be intense.

Anyway, I don't do detail research GDEX, as its relatively high PE ratio since last year has prohibited me from studying it further.

It has proven that I was wrong as GDEX's share price keeps on advancing to higher and higher PE level.

Besides, I have also missed quite a few opportunities by giving higher PE stocks a miss.

Perhaps sometimes PE ratio is not that important in stock selection?


  1. yea, look at IHH, high PE + super low DY.

    1. You have gained a lot from IHH :) Still consider to keep? Perhaps it is recession-proof.

  2. My opinion is we should give higher PE for high growth company. However, I think GDEX's 75x PE is much too high, can it's future growth matches up with such high PE ? What if the growth not meeting market's forecast ? I suppose the share price will 'crash' then.
    For me, the downside risk is too much in extreme high PE stocks. Growth is not a sure thing predictable.