GHLSYS (0021) - GHL SYSTEMS BHD: Earnings Improved

GHLSYS (0021) - GHL SYSTEMS BHD: Earnings Improved

Results Update

In QE30/6/2016, GHLSYS's net profit rose 8% q-o-q or 72% y-o-y to RM4.7 million while revenue rose 12% q-o-q or 26% y-o-y to RM62 million. Revenue rose y-o-y by RM12.7 million primarily driven by increase in the TPA, Shared Services and Solutions Services divisions of 14.1%, 27.6% and 82.3% respectively. Net profit margins during this quarter improved due to a more normalized tax rate as compared to 2Q15, as well as improved operating margins and lower interest expenses. 

Table: GHLSYS's last 8 quarters P&L

Chart 2: GHLSYS's last 15 quarters P&L

GHLSYS (closed at RM0.84 yesterday) is now trading at a PER of 41x (based on last 4 quarters' EPS of 2.05 sen). Based on average earning CAGR of 45% over the past 2 years, PEG ratio is still below 1. Thus, GHLSYS's valuation is deemed acceptable for a growth stock.

Technical Outlook

GHLSYS broke above the horizontal line at RM0.30 in 2013 and rallied to a high of RM1.25-1.30 in May 2015 (right after the start date of GST in Malaysia). Thereafter, it dropped back and found support at the 30-month EMA line at RM0.80. In addition, it has support from the horizontal lines at RM0.70 & RN0.60.

Chart 2: GHLSYS's monthly chart as at Sep 2, 2016 ( (Source:

Zooming into the weekly chart, we can see that the stock is trending lower in a downtrend line with resistance at RM0.95. An upside breakout above this downtrend line could signal the continuation of its prior uptrend.

Chart 3: GHLSYS's weekly chart as at Sep 2, 2016 (Source:


Based on good financial performance and 'acceptable' valuation for a growth stock, GHLSYS could be a good stock for long-term investment. Good entry is at RM0.70.


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GHLSYS (0021) - GHL SYSTEMS BHD: Earnings Improved