Good morning.
Today, we feature a note on Notion VTEC Berhad in our FundTech Radar – 31st July 2018. It is primarily engaged in three business segments - design and volume production of high precision metal manufacturing of hard disk drive (HDD); automotive industries’ components; and engineered products. Its exports constituted approximately 82% of its total revenue.
Fundamental Stance
· Turned around in FY16.
· Its FY17 PATAMI margin improved to 4.2% as compared to 0.9% in FY16.
· Net cash position of RM56.2m (17sen per share) as at 31 Mar 2018.
· FY17 dividend yield of 5.3% with div. payout ratios of about 85.9%.
· Notion will be adopting a div. policy of 30% of the Group’s PATAMI for FYE 30 Sep 2017 onwards.
· The largest shareholder of Notion is Nikon Corp, a Japanese multinational corporation headquartered in Tokyo, Japan.
· Its automotive sector where it supplies components for the Electronic Braking System will grow by 30% year on year.
· Strengthening USD against MYR will have a positive impact on its business.
· Challenges are potential minimum wage rise, higher aluminium prices, higher fuel prices and the implementation of the Sales and Services Tax.
· There will be further progress in its fire insurance claims coming over the next few quarters.
· Currently trading at an extremely low 12-month trailing P/E of 4.3x (3.0x if excludes 17sen net cash per share)
Technical Front
Sideways consolidation remains within triangle formation.
Resistances: 0.66/0.795/1.00
Supports: 0.525/0.455/0.40
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
31st Jul 2018
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