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Tuesday, 10 November 2015

Kungfu Penta

1.       Company’s Management
Ex CEO Tan Boon Teik resigned and disposed his 3.997m shares on 23 June 2015. Another announcement filed with Bursa stated the total 3.997m shares were acquired by Mr. Chuah Chong Ewe. One thing I like about the management is they file the relationship of the shareholders. I perceived that there is a Management change in Penta although the shareholders are related. The price did went up for awhile from 0.75 to 0.90 then soften back. Perhaps it might due to the feel good factor of new CEO. 

2.       Business Analysis
Semicon and exports related has been doing good this year. I expect the Penta's price should be OK for the rest of this year. Revenue / Profit expected to be stable for 2015 due to the other income gains reported in the Latest Quarterly Report. 

For normal fundamental analysis, as long as Current Quarter is better than Previous Quarter means good? Theoretically yes. But under Good Accounting Analysis, we prefer to look at Current Quarterly Report VS Last Year Quarterly Report. For Penta, it is 5.4m for Q3 2015 vs 2.0m for Q3 2014.
We minus out the 2.6m from other income means it is left with 2m plus profit. Slightly better compare to Q3 2014. Neutral.

3.       Financial Statement Analysis
Income Statement
Profit Margin   : 14% pass (<5% fail)
Interest Cover  : 17x pass  (<3x fail)
Profit for the past 3 years  (pass)

Balance Sheet
Current Ratio   : 1.91 pass (<1x fail)
Debts to Equity Ratio : 0.44x pass (>3x fail)

Cash Flow
Positive at least 1 year: Pass

4.       Pricing Analysis
Price to Earnings – Q3 2015 is a inflated by the one off gain. To reflect a better valuation, ill use Q1 and Q2 and annualized it. 
(1.31 + 2.44)2 = 7.5
P/E = 0.795/7.5 = 10.6x (acceptable)

Price to Book Value – 1.49x (not cheap)

Penta's Management's Comment on her Latest Quarterly Report:

Pentamaster is expected to benefit from Origo's platform to showcase the new venture given the huge potentials from growing IoT concepts.
Subject to the external market conditions and macroeconomic factors, the overall business performance in 2015 remains promising with better cost structure and wider sales base.

Penta pass all the Financial Health Analysis Ratios and the Price appear to be acceptable but not cheap. Things we need to put in consideration:

 1. New CEO appointment. We are not aware of his Management style and track record.
2. Venture into new field of development.
3. Placement of 10% to new investor whom we are not sure of his background and profile.

As I am expecting a weaker RM vs USD, it should benefiting her for the next 1 or 2 quarters. I am willing to nibble a little bit for Penta but putting a cautious view and constant monitoring. 

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Humble Pie
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1 comment:

    TG 184.80/184.50/184.20
    SL 188.80
    capitalstars past performance