Investor on the Street

KRONO (0176): Should you take a keener look or No?

Publish date: Sun, 02 Apr 2023, 04:29 PM

KRONO (0176) is an ACE Market company in the Digital Services segment. KRONO is involved in Enterprise Data Management. 

KRONO has 2 main businesses:

1. Enterprise Data Management Infrastructure Technology (EDM IT)

This segment contributes 86% of total revenue. 

2. Cloud & Hybrid As A Service (AAS)

As opposed to hardware based EDM IT, AAS provides cloud-based services. Revenue contribution is minor, but is growing fast. 

Is KRONO selling at cheap price now?

1. Share price you pay is lower than Price to Book.

KRONO's share price is RM 0.555, whilst its net assets is about RM 0.57.

2. Best performance in FY2023.

KRONO's revenue hit all-time high in FY2023. Net profit hit all-time high in the same year. Share price all-time high was in Nov 2017 around RM 1.10. Share price could have further upside. 

3. Financial Statements.

KRONO usually has positive net cash from operations each quarter. KRONO is a net cash company with little debts. KRONO seldom gives dividends, the only time was at 2019. 

4. Insider dealings.

Senior Independent Non-Executive Director Mr. John Chin Shoo Ted sold shares last year around RM0.455. Major shareholder Desert Streams Investments Ltd sold some shares recently. Either they need money or they don't think the shares are undervalued now. 

5. PE ratio is around 16.

KRONO'S trailing PE ratio is reasonable. 

I have KRONO shares. Suppose KRONO produces an average net profit to shareholders of 4.2mil./quarter, given PE ratio of 15, KRONO should be worth RM 0.35.

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