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ELSOFT - Diversifying into automotive and medical with technology
BASIC INFORMATION
Exchange: KLSE
Current Price: RM 1.870
Diluted Shares Outstanding: 181,132,000
Market Capitalization: RM 338.7 million
Public Float: 18%
Industry: Technology Equipments
QUANTITATIVE ANALYSIS
| Previous FY | TTM | MRQ | Criteria (Annualised) | |
|---|---|---|---|---|
| Valuation | ||||
| Historical P(EBITDA)R | 11.23 | 13.09 | <10 | |
| Trailing PTBV | 4.21 | |||
| Dividend Yield | 2.1% | - | ||
| Capital Structure | ||||
| Long Term Debt/Total Asset | 0.8% | 0.6% | <30% | |
| Total Debt/Total Asset | 6.7% | 5.1% | <60% | |
| Management Effectiveness | ||||
| ROE (use EBITDA) | 29.2% | 41.9% | 6.5% | >15% |
| ROA (use EBITDA) | 26.4% | 38.7% | 6.2% | >6% |
| ROIC (use EBITDA) | 27.2% | 39.7% | 6.4% | >4% |
| Liquidity | ||||
| Cash Ratio | 1.84 | 3.80 | ||
| Quick Ratio | 6.39 | 13.24 | >0.8 | |
| Profitability | ||||
| EBITDA Margin | 47.5% | 49.1% | 49.3% | >5% |
| EBITDA (cents) | 11.85 | 13.89 | 2.80 | |
| Cash Flow | ||||
| Operating Cash Flow/Net Profit | 0.69 | 0.77 | 0.61 | >0.5 |
| Free Cash Flow/Net Profit | 0.66 | 0.75 | 0.59 | >0.2 |
| YoY | QoQ | Criteria | ||
|---|---|---|---|---|
| Growth | ||||
| Revenue | 79.0% | 144.6% | >10% | |
| EBITDA | 82.6% | 265.1% | >5% | |
| EBITDA/Equity | 50.7% | 188.9% | >0% |
Comment: Valuation ratios failed slightly whereas all other criterias pass with flying colours. This is fine for a technology stock.
QUALITATIVE ANALYSIS
Advantages: Large cash holdings in USD to further boost company performance. ELSOFT also has a pioneer status for 100% tax exemption on its earnings. Business is also well diversified to prevent dependence on growth of smart devices only. ELSOFT provides for other segments such as the automotive and medical industry.
Risks: ELSOFT may see increased competition from other companies such as MMSV, FRONTKN and INARI.
RESULTS
Target Price: RM 2.930
Potential Upside: 57% (based on current price)
Margin of Safety: 36% (based on current price)
Maximum Entry Price (Fundamental): RM 2.050
Recommended Entry Price (Technical): RM 1.780
Cut Loss: RM 1.600
Holding Period: Until end of August 2016 (After QR)
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DISCLAIMER
Financial data is mostly obtained from Morningstar.com and i*Trade@CIMB. Should you have any doubts in the accuracy of this data source, kindly refrain from using this analysis for your investment decisions. The analysis has a buy/sell recommendation, however EquityWhiz will not be liable for any losses as a result of this analysis.
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