QUANTUM LEAP IN EARNINGS - AGESON BERHAD (7145)
I would like to publish this article to address the superb quarterly result announced by AGESON BERHAD, who is able to deliver a substantial 666.71% increase in net profit!
Recently, I noted that there had been some noises in the market and bad mouthing in the forum about AGESON. Whatever the motive are behind these people, they cannot deny the fact that AGESON is deliverying very, very good results.
For those people who are addressing that the company is scamming, I'm not sure if you had went through any form of formal education in finance / business / accounting. While the term is being called "expenses", abnormal items can twist the figure to profit.
For example, if the company overstated it's operating expenses previously, they are allowed to write-back the additional amount. Also, if you followed AGESON previously, you will notice that there had been some corporate restructuring going on with the company, hence it is acceptable to have a positive operating expenses.
So next time, get your facts right before commenting ^^ (Just kidding, this is i3investor forum, who are we kidding)
Let's take the benefit of doubt - assuming you really have doubts on the positive operating expenses, let's remove the additional RM 7.0 Million earnings in it. But do we add back the RM 1.7 Million in the expenses?
No, if you observed closely, there's an additional term called "Share of associate company results" due to the company restructuring activities. Hence, basically that represents the expenses of the company.
So after we removed the said figure, AGESON still achieved RM 10.2 Million in net profit, a substantial increase of 402% of increase in net profit! And, during the MCO period!
Ah yes, some investors might be curious about the company's cash flow. Let's take a look at it:
.. a whopping RM 33.8 Million net operating cash generated mainly from their construction division!
Previously there's an article on the forum address the supernormal net profit margin that AGESON have; and in this case, yes. P/E of anything less than 10 times is market mispricing!
With the accumulated EPS of 4.26 cents per share, a P/E of 10 times easily translate to RM 0.425 (adjusted due to Bursa minimum ticker) of stock price. Currently the stock is having a margin of safety of 63.5%!
To conclude.. is AGESON undervalued? You bet. Sound investors tend to invest against the tide and reap handsome profits. Are you one of them?
Apart from that, I would also cite Public Investment Bank for initiating a technical buy call for AGESON:
- Target Price: RM0.180, RM0.190
- Last closing price: RM0.165
- Potential return: 9.0%, 15.1%
- Support: RM0.155
- Stop Loss: RM0.145
Possible for sideways breakout. AGES is staging a potential breakout of its sideways channel. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.180 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.190.
However, failure to hold on to support level of RM0.155 may indicate weakness in the share price and hence, a cut-loss signal.
Source: PublicInvest Research - 28 Aug 2020