Hot stock IQ group soars 12.8% to RM1.41 on strong 1Q earnings

by **Cals** Thu 28 Aug 2014, 18:21

Hot stock IQ group soars 12.8% to RM1.41 on strong 1Q earnings

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Thursday, 28 August 2014 11:03
KUALA LUMPUR (Aug 28): IQ Group Holdings Bhd shares were among the top gainers in early morning trades today on Bursa Malaysia following the release of strong first quarter results.
Shares of the original equipments manufacturer rose 16 sen or 12.8% to RM1.41 per share with some 833,000 shares traded as of 10:28 am
IQ Group net profit for the first financial quarter ended June 30, 2014 rose 391% to RM 7.47 million from RM1.52 million a year ago.
Revenue for the quarter rose 46% to RM56.74 million from RM38.83 million a year ago.
In a note released today, RHB Retail Research said that the company’s improved profits accounted for 60% of its full year forecast due to higher sales and favourable foreign exchange rates.
Consumer analyst Chaw Sook Ting of RHB Retail Research said: “1QFY15 results gave a boost to our view, as we believe IQ’s earnings could continue growing in the coming years after its internal restructuring and business streamlining activities.”
“Its stronger trading activities in the US, Europe and Japan markets were underpinned by strong orders, better sales of its new products and gradual recovery in the respective regions,” she said.
Chaw has tweaked the company earnings for FY15F revenue and net profit forecasts higher by 2% and 10% respectively to reflect its better performances.
She maintains a “BUY” recommendation on the company, with a higher RM2.03 fair value from RM1.84 pegged to a FY15F P/E of 12.5 times
The analyst had also compared the company with Taiwan listed Everspring Industry Co Ltd which currently trades at 2.5 times price to book versus IQ’s price to book of 1 times.
“According to Everspring’s product range as advertised on its website and its latest financial figures, we believe IQ should rightfully have comparable valuations to the former. Even if we applied a 2x P/BV on IQ, which is still 25% lower compared to Everspring’s valuation of 2.5 P/BV, IQ’s share price could be worth MYR2.28 based on its book value as at 31 March 2014,” commented Chaw.