KUALA LUMPUR (June 27): Notion VTec Bhd (KL:NOTION), in its clarification on a recent article, maintained that three main factors were the driving factors for recent rise in its share price: strong financial performance recovery, the sector’s turnaround, and positive analyst outlook.
It noted these in a bourse filing Thursday in response to an article titled “Frankly Speaking: Business unusual for Notion”, which appeared in The Edge Malaysia weekly’s June 24-30, 2024 issue.
The article discussed the company's unusual share price movement saw its market value jump in a short span of time, its high valuation despite not being among companies that are able to show sustained high profits, and the crowded hard disk drive (HDD) segment that it is in.
In particular, the article noted how the biggest beneficiaries of the recent share price movement were warrant holders who got their shares for free just prior to the share spike, as Notion VTec issued 51 million free warrants on the basis of one for every 10 shares held just prior to the share spike. The warrants, listed at 28 sen each on May 13, traded at a high of RM2 in just a few weeks. They’re now trading around RM1.88 apiece.
Notion VTec, in its Thursday filing, also pointed to its response to the unusual market activity query from Bursa Malaysia Securities on June 18, in which it noted that there were heightened investors’ interest in its shares due to positive comments about its business and outlook following the publication of an article in The Edge Malaysia weekly’s May 27-June 2 issue, with the headline: “Well-diversified Notion VTec seeks next earnings boost”.
Notion VTec said its latest financials had reflected a significant turnaround in its sales and profitability. In the first quarter of FY2024, the company recorded a sales revenue of RM93.7 million, with a profit after tax (PAT) of RM8 million. By 2QFY2024, sales revenue grew19% to RM111.5 million, with PAT rising to RM14 million.
Notion VTec also cited an investment research house that reviewed the group’s prospects and initiated coverage with a target price of RM3.28, and a forward diluted earnings per share multiple of 30 times.
“This positive analyst coverage report may be a factor resulting in the fourfold jump in the valuation of the company,” said Notion VTec.
Meanwhile, it said key players in the HDD segment have consolidated into three major manufacturers, with high barriers to entry due to sub-micron precision requirements.
“Only a few approved vendors including Notion VTec are qualified to supply these three major manufacturers,” it said.
Notion VTec said further details will be disclosed in the group’s unaudited consolidated financial results for the third quarter of FY2024, by Aug 16, 2024.
Nonetheless, it said shareholders and investors are advised to exercise caution when dealing in the company’s shares and consult professional advisers if in doubt.
Notion VTec shares closed five sen or 2.4% lower at RM2.07 on Thursday, valuing the company at RM1.08 billion.