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Best Value Pick of the Year 2016: Visdynamics Holdings Bhd (Updated TP of RM0.35 sens)
Vis released their QR yesterday and registered an amazing 318% increase YoY. Even QoQ, Vis registered a great 9% increase. The share price immediately jumped 10% in morning trading session. The revenue grew from RM865k to RM11.7 million (record high) YoY and net profit increased from a loss of RM987k to RM2.1 million. For the immediate preceding quarter, the profit increased from the earlier record high 1.78 EPS to 1.94 EPS. NTA increased to 0.21 sens.
It was a great turnaround from the start of the year and finally they manage to end it with a bang with a record high performance. There is increase in both topline and bottomline.
Most importantly, I was factoring in the inconsistency of the semicon industry yet it defied the odds and went ahead to outdo its earlier record quarter. I am very pleased with the ability of the management to translate growth into actual earnings unlike the earlier quarters.
From the chart above, Vis earnings has been volatile and inconsistent. However, this time, the company cap off the full 4Q with amazing performance and record performance with a healthy profit margin. I think the chart speaks for itself. This is a clear case of turnaround.
Considering the record performance, the management maintains their optimism for the the future prospect. This is another plus point.
Based on the results of the latest QR and the management's comments, I believe Visdynamics future prospect is bright. Altough many would argued that Vis should be worth 38 sens based on the trailing 4Q EPS at 10x multiple valuation, I think this view is simplistic. Having said that, it is not farfetch.
Additionally, for a penny counter 10-12x PE is indeed quite a low, specifically a tech / semicon stock where peers are usually 15x multiples. Nonetheless, my style of investment is prudent. I would like to apply a discount at only attach 9x PE for the counter deriving a fair value of 35 sens. Those who are bullish can maintain thier higher TP but the reason I am being conservative is because of the overall economy.
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Food for thought: