Chart : IFCAMSC daily chart as of Aug 27 2014 (source: ChartNexus)

IFCAMSC a unique software solution company specializing in the property industry with a unique name. The counter recently attracted a lot of interest from local investment community which saw its share price rose from 8 sen to closed at today 39 sen in just 5 months time. The almost 500% gain is seriously eye popping and most people starting to wonder whether this is just another short-live pump and dump kind of thing or a serious sustainable growth story. Unlike most of the recent hot stocks that bank on rumours or 'news' of RTO, venturing into 'attractive' industry and etc, it is a sound company with an easy to understand business. The company with a net cash of some RM 30 Million (6.7sen/share), directly benefited from the implementation of GST (clients' system upgrading) and highly potential overseas operation (especially in China). Last quarter earning is the best of the company history with EPS of 0.67 sen. Annualized EPS will be 2.68 sen. With today closing price of 39 sen, it is currently trading at 14.55 PER ratio based on the annualized EPS. It is not too expensive considering the net cash of 6.7 sen per share. 

 

The question that I have in my mind is that, is the earning of the last quarter sustainable? Base on the previous quarters or last few years earning for that matter, the current share price of the counter certainly can't be justified. Thus the sustainability of the earning performance will be crucial. I'm no expert in software solution business thus I'm not sure whether upgrading system for GST is a one time thing or a continuous operation. If is just one time thing, then whether the earning can be sustained will be an issue after most of the current clients finished upgrading. The management seems very optimistic with the future of the company and expecting overseas operation to be robust for the rest of the year. Well, judging on the rapid rise of the share price, can we afford to wait for next quarter earning to decide whether to buy or not? If the earning is not sustainable then how? I guess is just a big 'IF' for now.