Saturday, August 18, 2012

Vitrox is doing good!

Yesh! At least it’s what I expected. Semiconductor market doesn’t look good currently, hence any industry that is related to semiconductor has certain level of effects on their sales. My Vitrox, at least, shows some good result this quarter (April to June), which has the EPS of 4.23 sen, a reverse as compared to last quarter, which was loss of EPS –0.41 sen.

However, as compared to the corresponding quarter last year, which recorded EPS of 5.60 sen. From the financial report, the company explains that the decrease in profit is due to the lower sales of the Machine Vision System (MVS), Automated Board Inspection (ABI) and Electronics Communication System (ECS).

These three systems / technologies developed by Vitrox is directly related to the market performance of semiconductor. They are basically used in the manufacturing of semiconductor devices. Who are the customers of Vitrox? The semiconductor manufacturers. Instead of the consumers like most of us, who bought smartphone and tablet, Vitrox’s customers are those who produce the chips inside those mobile devices.

From a bigger view of the market

Recently, most of the big countries, Japanese, South Korea, Singapore, and both European and US countries, are facing a slower growth of economy in this quarter. But Malaysia has reported 5.6% growth this quarter (I wonder how my motherland make it while all the other countries is facing a slower growth. XD)

Semiconductor is one of the industries that is directly related to the consumerism. Mobile devices like smartphones and tablets, laptops, and other electronic devices are sold to the consumers. Therefore, the slowing down of economy globally might cause the less demands of these devices. Hence, the semiconductor manufacturers face the lesser orders from their clients as well, like Iphone, HTC, Samsung and so on. Vitrox, who provides the machine for the manufacturers, is affected too.

However, what is reported in the financial is a bit surprising for me. It turns the red into blue from the first quarter. What I’m waiting for after selling Gtronic is to wait for this result, Vitrox, to show me its performance in the slow market. Haha, Vitrox, I never see-wrong-you!

Iphone to be announced in September

Another wave of semiconductor demands might be caused by the announcement of Iphone5, in this coming September. So, I predict this will increase the sales of semiconductor manufacturers. Hence, Vitrox, show me your power!

I’m going to buy in next week. I supposed to buy in on Friday, but I didn’t realise the financial result is out on Thursday. But never mind, it’s still below the price I bought in last time. So, this time I am going to average down my price of this shares, and increase its portion in my portfolio.

Fundamental analysis

Dividend: Vitrox just announced a dividend paid of 1 sen. Compare to the corresponding quarter last year, it announced 3 sen. The dividend decrease is mainly due to the loss first quarter. If it maintains the same pay 1 sen last quarter of last year, this year there’s going to be only 2 sen dividend in total. So, the Dividend Yield for this year will be 0.02/0.66 = 3%, which is relatively lower, even lower than the fixed deposit I save in bank. This is not convincing me to buy in more.

EPS (Earning per share): In the first quarter, Vitrox faced loss of –0.41sen per share. Second quarter, which was just announced, shown to be very good result, which is 4.23sen earning per share. This figure is comparative, compared with the previous quarter and previous year. Comparing with previous year is to make sure, by season, it follows the trend of earning. Although it doesn’t make the profit as good as previous year, it shows a very competitive strength and well management that turn the red into blue from the past quarter, as people is talking about the semiconductor market is moving at low level recently.

Net Asset Value (NAV): The increase of NAV also shows me a good investment chance as it proves that company is expanding by increasing its asset value. It increases the Total Asset from RM117,187,000 to RM131,073,000, at the same time increase the liability from RM21,640,000 to RM28,048,000. With the increase of about RM7million in liability, it increases RM13million of asset. This means, company does not only rely on borrowing debt to increase its asset. It relies on the earning. With the increase of asset, it increase the future cash flow as well, as business is growing larger.

Some bad factors: However, some figures do not look nice. The inventories and receivable turnover was recorded to be 315 days and 190 days respectively. This shows that Vitrox is finding it hard to sell the product fast, and payment is slow also. But, as we know, Vitrox is not selling consumer product, it is selling to the manufacturers, big scale product business. Hence, the turnover is normally very long.

Besides, Return-on-equity (ROE) is also not very impressive. It is about 16% (rough calculation), which is low compare the past year (24%). But, with the performance that Vitrox management team can do, I believe they can increase this value.

In short, most of the bad figures has been “translated” by myself into neutral. Haha…just for my reference. Investment, it’s not just on figures, but on qualitative as well.

Gtronic sold, Vitrox to be the next

So, Vitrox, you would be the next of my main portfolio leader, don’t disappoint me. I believe in your management. Gtronic, thanks for your great performance! I will see you again if you are back to the price of interested.

Time to get my calculator to see how many shares should I buy in!

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