P.I.E - PRICE IS ESCALATING!!

BUSINESS HIGHLIGHTS:

• P.I.E main business segments are manufacturing segments, trading segment & others.
   
• Manufacturing segments comprised of EMS activities, raw cable & wire and wire harness.
   
• EMS activities contributes almost 83.6% of overall company revenue.
   
• Strong revenue growth of EMS activities compared to previous quarter, improvement of 27%.
   

FINANCIAL STRENGTH:

• P.I.E is a net cash company with cash+ short-term deposits of 155.7million.
   
• Current ratio of 2.4, whereby the company is able to pay back all the short term liabilities.
   

GROWTH CATALYST & FUTURE PROSPECT:

• EMS activities (78%) orders are expected to increase in the long run from existing customers. Therefore, no disruption of supply issue.
   
• Beneficial effect of USA-China trade war, receive more orders from new overseas customers.
   

RISKS:

• Global spread of COVID-19, P.I.E will face production and shipment issue.
   
• Fluctuation of Ringgit Malaysia against USD.
   
• Political uncertainties in Malaysia will create panic selling.
   
• Coming US presidential election will create short term ad hoc to the market.
   

VALUATION:

• P.I.E is trading at P/E 27.9X.
   
• EMS competitors such as VS & ATAIMS are trading at P/E of 38X. SKP at P/E 35X.
   
• Conservatively, assume P.I.E fair valuation at P/E of 35X, the share price is worth RM2.30. (24% upside)
   

TECHNICAL VIEW:

• Cup and handle pattern formed & break through the recent resistance of RM1.75 with big volume. 
   
• First support: RM1.75, second support: RM1.63.
   
• First resistance: RM2.00, second resistance: RM2.20.

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Disclamer: Nothing contained in this article should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.