Gtronic: Still Holding Strong

Globetronics FY14Q1 Financial Result

GTRONIC (RM mil)	FY14Q1	FY13Q4	FY13Q3	FY13Q2	FY13Q1
Revenue	83.4	78.5	79.5	85.5	77.5
PBT	17.0	15.0	18.6	16.5	12.3
PBT%	20.4	19.1	23.4	19.3	15.9
PAT	14.1	13.1	15.2	14.1	10.1
Total Equity	272.4	275.2	285.8	276.9	259.0
Total Assets	325.9	338.8	343.8	331.9	309.7
Trade Receivables	60.6	62.4	60.0	63.3	60.1
Inventories	11.1	14.2	17.2	15.4	16.0
Cash	141.0	147.3	148.8	131.0	109.7
Total Liabilities	53.5	63.6	58.1	55.1	20.7
Trade Payables	9.9	18.4	15.6	19.3	18.1
Other Payables	29.8	34.3	32.6	30.8	27.6
ST Borrowings	9.9	5.2	4.8	0.0	0.0
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	-6.3	41.5	42.2	24.6	3.5
Operation	13.2	87.5	62.3	40.3	18.1
Investment	-7.1	-11.2	-9.4	-7.1	-2.3
Financing	-12.3	-34.7	-10.7	-8.6	-12.3
EPS	5.04	4.73	5.51	5.15	3.73
NAS	0.97	0.99	1.03	1.00	0.95
D/E Ratio	net cash	net cash	net cash	net cash	net cash

Globetronics management  has guided that the first half of its FY14 will be flat. However, both its revenue and net profit in Fy14Q1 improve YoY and QoQ, which is not bad indeed.

The better result is mainly due to better volume loading from most of its customers.

Balance sheet is still as strong as before.

The upcoming FY14Q2 result might look like this. However, I would expect some surprise in its second half after the 3 news products start their contribution to its top & bottom lines.

Globetronics has recommended a final & special single tier dividend of 4% each (total 4 sen) for its FY2013. This is higher than total 3sen declared in the corresponding period last year.

Total dividend in FY13 sums up to 18sen, 50% more than 12sen paid in FY12. This works out to be almost 95% dividend payout from its FY13 net profit.

At current share price of RM3.58, it is still a good 5% dividend yield.

I predict Gtronic can achieve RM60mil net profit in FY14 which represents a 15% growth. With current total paid up shares of 281 million, target EPS will be 21.4sen, thus target price is RM3.20 given a PE of 15x.

Similarly, even though current share price is higher than my target price, I'll still hold Gtronics for the time being.