$NOTION / 0083 (NOTION VTEC BERHAD)

8 May 2024

NOTION Brief information

We opined current price @ 54.5 Sen has corrected and suppressed so Co can fix an attractive good price for the Bonus Warrant to be listed on 13 May. After the warrant being listed, we believe it will Vroom Vroom if Co can CONTINUE AND MAINTAIN THE Q1 31 Dec 2023 result of PAT of RM8.0 million with EPS of 1.56 Sen for Q2 31 March to be announced by end May.

The Group recorded revenue and profit after taxation (“PAT”) of RM 93.8 million and RM 8.0 million respectively for the quarter ended 31 December 2023 (“Q1FY2024”). The Profit before Tax (“PBT”) of RM13.1 million in the current quarter compared to Q4FY2023 Loss before Taxation of RM38.0 million was mainly due to improved gross profit at RM21.7 million. In addition, the LBT in Q4FY2023 was mainly due to the impairment of plants and machineries of RM30.7 million and inventory written off of RM8.5 million.

The improvement in result was also mainly due to the Co making inroad into Western Digital for the supply of Spacer Rings with projected increasing volume moving into June quarter and the remaining year.

Extract from Q1 31 Dec 2023 Report

PROSPECTS FOR THE CURRENT FINANCIAL YEAR FY 2024

Narrative by quarters:

In comparison to the challenges faced in the previous quarter, particularly the one-off impairment in Q4FY2023, we are delighted to report a significant improvement in our performance. This quarter, we achieved a PAT of RM8 million on a revenue of RM94 million, showcasing a commendable turnaround, Despite the strengthening of the USD against RM, our performance is attributed primarily to strategic cost management initiatives, resulting in a notable squeeze on the cost of goods sold and efficiency gains across our operations. Annualizing our PAT to RM32 million underscores the robustness of our earnings potential. With our current market capitalization standing at RM162 million, this translates to a Price-to-Earnings (PE) ratio of 5.06 times, based on a market capitalization as at 16 February 2024. This indicates a compelling valuation proposition for Notion stockholders.
PLEASE NOTE THAT CURRENT MARKET CAPITALISATION TODAY 8 MAY BASED ON SHARE PRICE OF @54.5 Sen is RM281.27 mil would translate into PE of 8.8.

It is worth noting the seasonality trends in our sales, with a dip observed in December and February, primarily attributable to the slowdown during the Chinese New Year holiday period. This seasonal variation is a well-recognized aspect of our business cycle, and we remain vigilant in our strategic planning to mitigate its impact. Among our three main segments, the EMS segment exhibits noticeable volatility in sales, driven by both seasonal factors and prevailing market trends. Despite these fluctuations, we remain agile in our approach to navigate through market dynamics and capitalize on emerging opportunities. In conclusion, our performance in Q1FY2024 reflects our resilience and ability to adapt to changing market conditions. We are confident in our strategic direction and remain committed to delivering sustainable value to our shareholders.


Outlook:

Our quarterly performance has demonstrated steady growth across all segments. As we align ourselves with escalating market demands, our Group remains committed to expansion, anticipating increased capital expenditure to support our growth trajectory. Our Group’s cash position stands at RM52 million, reflecting a commendable increase from the previous quarter’s RM50 million and a substantial growth from RM21 million at the same time last year. This solid financial foundation positions us favorably to pursue strategic initiatives and capitalize on emerging opportunities. Furthermore, our Group remains proactive in exploring new business ventures that have the potential to bolster both our top-line revenue and bottom-line profits. Through meticulous consideration and thorough investigation, we aim to diversify our revenue streams and enhance shareholder value.

Looking ahead, the Board maintains an optimistic outlook for FY2024, envisioning a year of turnaround characterized by robust revenue and profit growth. Barring the presence of black swan events or potential unforeseen challenges, we are confident in our ability to navigate through uncertainties and capitalize on our strengths to deliver sustainable value to our esteemed shareholders.



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