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This is a counter with good business foundation, solid financial as observed from the QR. Technical wise, it is oversold with sharp price movement downwards. I consider to chip in at 0.535 to try my luck following a slow down in US CPI which causes the positive sentiment as currently I just sold RGTECH.
Welcome all to discuss below! If you like my post, do follow me here, it gave me motivation to continue writing and sharing my ideas at here. Note that this is not buy/sell recommendation, you should do your own research, form your own view for any buy/sell action in the market. Thank you.
It is quite hard to give a TP now given the weak market. In a slightly longer time frame (more than a month), it could test RM0.60, which is a 12% gain from my position.
Taking the hints from the MD, the key person that is familiar with the big picture of the company, in this article published in TheEdge ("The State of the Nation: What firms say of their sales amid moderation in manufacturing PMI"), we can expect sales revenue for March around RM30m, while he also mentioned slow January and short February. If the revenue in the upcoming QR can at least surpass the level of RM70m (20+20+30), one point is proved i.e. customers are more skewed towards the automotive integrated circuit side, so demand is still running through.
Next would be the bottom line. The profit margin needs to be good then only investors are confident to the company. From the long term perspective, factory expansion into Batu Kawan and office setup in China which will eat up some money in terms of operating expenses (training of staffs etc.). The margin of 7.5% in Dec vs 13.2% in Sep, let's consider that has already be reflected with a lower price. (Before QR is RM0.635 and now as at 13th May is only RM0.530)
So Mar'23 QR, as long as hitting minimum RM70m sales and a profit margin more than 7.5% is considered a good news, even better if margin can go higher than previous year same quarter of 10.1%. That would reflects the point of demand is still running with good strategy from the company to manage business amid of inflation, recession and other generally pessimistic outlook of the big market.