Gtronic: More Excitement Still To Come

Globetronics FY14Q2 Financial Result

GTRONIC	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2
Revenue	90.6	83.4	78.5	79.5	85.5
PBT	20.8	17.0	15.0	18.6	16.5
PBT%	23.0	20.4	19.1	23.4	19.3
PAT	17.3	14.1	13.1	15.2	14.1
Total Equity	291.4	272.4	275.2	285.8	276.9
Total Assets	361.2	325.9	338.8	343.8	331.9
Trade Receivables	70.3	60.6	62.4	60.0	63.3
Inventories	13.4	11.1	14.2	17.2	15.4
Cash	169.5	141.0	147.3	148.8	131.0
Total Liabilities	69.8	53.5	63.6	58.1	55.1
Trade Payables	17.2	9.9	18.4	15.6	19.3
Other Payables	32.1	29.8	34.3	32.6	30.8
ST Borrowings	11.5	9.9	5.2	4.8	0.0
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	22.6	-6.3	41.5	42.2	24.6
Operation	34.5	13.2	87.5	62.3	40.3
Investment	-10.9	-7.1	-11.2	-9.4	-7.1
Financing	-1.0	-12.3	-34.7	-10.7	-8.6
EPS	6.17	5.04	4.73	5.51	5.15
NAS	1.04	0.97	0.99	1.03	1.00
D/E Ratio	net cash	net cash	net cash	net cash	net cash

I thought Gtronic's financial result of 1HFY14 will be flat, as "guided" by its management early this year. Significant growth is expected to be seen only in the second half.

Nevertheless, it is definitely a good surprise that Gtronic posts a much better result for the first 6 months of FY14, in which its net profit grows 29.2% YoY to RM31.4mil from a 6.6% rise in revenue in the same period.

Second half of FY14 could be even better!

For FY14Q2, revenue & net profit increase 8.6% & 22.7% respectively QoQ. This is mainly due to higher volume loading, better economy of scale, better productivity & cost control.

I expect Gtronic's PAT to reach RM70mil for its FY14. With current shares of 281mil, target EPS will be 24.9sen and thus target price RM4.48 if given a PE ratio of 18x.

From history, Gtronic will announce a second interim dividend + special dividend within August, which will be ex-ed in October.

If its FY14 PAT can really reach RM70mil and it pays 60% as dividend, then it might be total 15sen dividend for FY14 which is still a good 3.2% yield at share price of RM4.65.

Since it is actively seeking acquisition target, I'm not sure how much dividend it will pay to shareholders even though its net cash is at a record high.

Anyway, I will continue to hold Gtronic as its future looks very exciting to me.