Wednesday 8 July 2020

Tech Stocks: Still Can Buy Now?

Apart from glove stocks, I think technology stocks are the best performers so far in our stock market. Most of them are close to or even break their previous high set before Covid-19.

This is certainly helped by Nasdaq Composite Index which achieves record high and currently stays in that territory of above 10,000.

Before MCO, I already thought that tech stocks were not cheap. At this moment, of course they are not cheap to me.

They were cheap only in the second half of Mac20 but I failed to grab them.

However, I wish to find out which tech stocks are "relatively cheaper". So I compare their current price with their previous 52-week high before Covid-19.

I just use the simplest PE ratio to compare. If the latest quarterly result is negatively affected by Covid-19, I will not include it in the EPS. I will use the best 4 of the last 5 quarters instead.

Best 4Q Pre-Covid Post-Covid Current PE

EPS High High Price
GTRONIC 7.85 2.44 2.50 2.37 30.2
INARI 5.07 2.09 1.91 1.85 36.5
FRONTKEN 6.76 3.06 3.06 2.82 41.7
MPI 58.9 12.96 12.16 11.98 20.3
UNISEM -1.31 2.93 2.54 2.44
JHM 5.46 1.78 1.68 1.68 30.8
D&O 2.8 0.925 0.86 0.83 29.6
KESM 22.2 12.00 8.86 8.45 38.1
FPGROUP 2.94 1.01 0.875 0.855 29.1
AEMULUS -1.14 0.325 0.355 0.315
MI 7.58 3.11 3.33 3.33 43.9
PENTA 17.48 5.58 5.87 5.80 33.2
DUFU 21.4 5.3 5.87 5.78 27.0
NOTION 7.29 0.92 0.915 0.715 9.8
JCY -0.94 0.365 0.39 0.36
GREATEC 10.05 4.05 4.99 4.79 47.7
UWC 8.94 3.39 4.33 4.21 47.1
VITROX 18.45 9.57 10.46 10.24 55.5
SAM 64.6 8.64 8.23 8.00 12.4
REVENUE 2.76 1.53 1.31 1.22 44.2
DSONIC 4.42 1.69 1.67 1.46 33.0
MYEG 7.1 1.7 1.61 1.51 21.3
KRONO 4.16 0.96 0.68 0.555 13.3
K1 0.86 0.245 0.595 0.425 49.4
GPACKET -4.8 0.935 1.65 0.66

This is not an exhaustive list of all technology-related stocks listed in Bursa Malaysia. Some may not be real tech stocks.

Stocks in red represent those which have already exceeded their previous high before Covid-19. About half of them have achieved this feat and this just shows how hot the tech stocks are now.

For others, it looks like they are not far away and are on the way to break their previous pre-Covid high except Krono, Notion, Revenue, KESM & Unisem which have more than 20% to go.

We can see that most tech stocks have a PE ratio of around 30 and above now. There are quite a few of them with PE around 50.

Those "relatively cheaper" ones by PE ratio include MPI, Notion, SAM, MYEG & Krono.

MYEG is not really a tech stock and recently market seems to give it a PE of around 20.

There are quite a lot of one-off gains in Notion's EPS so it's not really cheap until we have a glimpse of the profit contribution of its new projects soon.

SAM looks really cheap, may be because of its aerospace business which is expected to go downhill in the near future even though its equipment segment is growing quite well.

Krono has been largely affected by its huge impairment loss in its latest quarter. Its ability to recover its core business in a short period of time is in doubt. If it's able to turn profitable next quarter, then I think its share price will rise.

K1 and GPacket have cloud related business like Krono. However, recently both seem to be under "goreng mode".

MPI is well established with lots of cash. Market doesn't seem to give it a higher PE like others and I'm not sure why as I don't know much about this company. Perhaps it is already stable and lack growth potential?

Of course we can't buy or sell base on PE ratio alone. A stock with PE of 40 may have a PE of only 20 one year later if it grows and doubles its profit.

As almost all the good tech stocks have high PE now, I think investors should either wait for a major price correction or invest in those which have great growth potential.


  1. Are you just focus on Malaysia Tech stock ,have you ever think of US tech stock ,i have typed a tech stocks about this situation

    1. Thanks for your sharing. At the moment I'm just focusing on Malaysia stocks