Grova1...yes you are right QES is a counter for investment which translates to holding power , one needs to hold this counter for few years in order to maximize profits..for example in early 2017 Penta was doing about RM0.30 as such short term holders would have sold it when it hit say maybe RM0.60 - RM0.90. However 3 years later the share price for Penta was RM5++ as such those who had accumulated and hold this counter for 3 years are the ones who reaped the maximum profit. As such my say is QES is one such counter, another counter that is also similar would be FPG. Hope this information helps.
The net profit margin of QES is not as high as other tech counters. This is because the company derives a big chunk of its revenue from its distribution division which enjoys a gross profit margin of around 22% - 23%. However, what most of the investors look at here is its manufacturing division which potentially yields a gross profit margin of 40% in a few years down the road.
By the way, as of 5 January 2022, QES has been trading around PE 35.31 while MI (PE 47.63), PENTA (PE 51.86), Greatec (59.26), Vitrox (PE 59.83), Aemulus (PE 77.93) and Elsoft (PE 366.22). As you can see from the PEs, QES's lower profit margin has been priced in and in the recent price run-up, what people focus is its future in manufacturing, especially after its joint venture with Applied Engineering which will help it move up the value chain which in turn will yield a even higher gross profit margin.
So you should ask yourself this question:
Considering the global chip shortage and future technological developments such as EVs, 5G and IoTs, do you believe that QES will succeed in expanding its manufacturing division?
If you believe in QES's endeavour, buy QES when it is still cheap because the future of its manufacturing division has not been priced in yet.
If you don't believe in QES's endeavour, buy other tech counters which are traded at high PEs as investors have priced in the future of the business.
I would not say this is the best time to buy now because no one should catch the falling knives. However, I would like to shed light on the valuation of QES.
The problem of chip shortage is forecasted to persist for at least 5 years. In other words, the earning visibility of the industry will remain clear for the next five years. It's almost certain that QES will manage to make more money in the next five years.
Considering that QES has been expanding its manufacturing division which yields a higher gross profit margin of 40%, and assuming that QES manages to earn 0.85 sen for the next four quarters consecutively in FY 2022, we will have a total EPS of 3.4 sen in FY 2022. If the market values the stock at a lower PE ratio of 25 because of Fed tapering, the price should be around RM 0.85.
The industry prospect and the company's fundamentals are still intact, in fact they are getting better and better.
I'm not saying that you should buy it now. However, the downtrend is real and it's unwise to catch the falling knives. But for those who are holding it now, think carefully before you cut loss. Don't sell because of panic.
Long time did not come here, still got the same peoples always talk loud when price go up or down, never satisfy them. May be QES owning them a lot haha.
Let ikan bilis like me eat sikit sikit la when people throw, pity me hahaha
Aiyaaaa.....why fruity guy so loud my purchase price is 0.30 cents wor I am still in green and i have no immediate use for the cash invested in QES I hold for another 10 years oso no problem lah....
That's the principle of investing. Why be affected by sentiment when the Co's fundamentals and future prospects are intact? 50c?... come to papa. 40c?!...come to papa again.
Allow me to hazard a guess... drop to 0.005 then propose share consolidation. Throw in rights issue and warrants for good measure. Seems quite possible. Scary.
Its ok lah fruity it drops more I accumulate more as long as the company is still making profit I dont mind investing in it..." to each his own" ya. I have been thru Mac 2020 and relatively know what needs to be done when the market is bearish ya....anyways thank you to you both Fruity and Arman you guys were good entertainment.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Westeros
836 posts
Posted by Westeros > 2022-01-03 12:30 | Report Abuse
Happy New Year 2022 guys