Posted by kcchongnz > Jun 2, 2013 09:10 AM

Is Redtone a good company? Is it a great investment? 

Posted by nhkch > May 31, 2013 11:58 AM | Report Abuse 
Hi kcchongz. Would like to know how you view redtone. Personally i think this counter going to perfrom well. The profit margin is high. From the financial report, it seem that the free cash flow is increasing. 

I agree with you the above. 

It does seem to me Redtone is a good company simply because of the turning around and the expected explosive growth in the near future. 

[The Company is principally engaged in the telecommunication business. Operations are carried out in Malaysia, Singapore and People's Republic of China. Its direct subsidiaries are REDtone Telecommunications Sdn. Bhd., which is engaged in the research, development, manufacturing and marketing of computer-telephony integration products, and provision of communication services; REDtone Technology Sdn. Bhd., which is a provider of total solutions in business communication and telecommunication; REDtone Network Sdn. Bhd., which is engaged in the research and development and marketing of communication applications; REDtone Marketing Sdn. Bhd.; REDtone Multimedia Sdn. Bhd., and REDtone Software Sdn Bhd., which is engaged in the research, design, develop and commercialization of voice over Internet protocol (VOIP) customer premise equipment.] 

The twelve month trailing revenue increased by 13% from 107m to 121m while earnings multiplies by 5.7 folds from 1.8m to 10m for fy ended 30/6/2013. This compared well when you consider Redtone was in the red for the same amount as at 30/6/2011. Margin expanded to double digit with ROE improved tremendously from 2% to 13%. ROIC is particularly impressive at 23%. Quality of earnings is great with ttm CFFO amounts to 20m. Will this great feat of Redtone continues? Hope someone in the know can shed some light on this. 

And how about whether Redtone is a good investment now especially in view that its share price has jumped by more than 70% from about just 40 sen a month ago? 

At the close of 71 sen last Friday, Redtone was traded at a PE of 7 times and 3.5 times its book value. The market must be having great expectation for Redtone. Below is my assessment on Redtone for you to judge for yourself if Redtone is a good investment. 

Redtone a Good company? 0.71
Good governance ?
Durable business ?
Growth Yes 13% in revenue 
ROTC Yes 23% >WACC 
Balance sheet Yes 0.05 D/E 
Cash flow Yes 163% CFFO/NI 

Screens for investing
ROTC Yes
P/B No 3.5 >2.0 
PE ratio No 27.4 >20