Notion VTec maintains share price surge due to financial and sector turnaround, analyst optimism

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. 

According to its filing to Bursa Malaysia, Notion was referring to the 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 unusual share price movement, questioned the justification for a fourfold valuation increase, and addressed concerns about the competitive hard disk drive (HDD) market segment.

In response to the unusual market activity (UMA) query by Bursa Malaysia Securities on June 18, Notion said the other two factors were “strong financial performance recovery” and increased investor interest due to positive comments in The Edge Malaysia weekly. 

The publication, dated May 27-June 2, 2024, featured the headline: “Well-diversified Notion VTec seeks next earnings boost”.

Notion also indicated a significant turnaround in sales and profitability for the group.

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 increased by 19% to RM111.5 million, with PAT rising to RM14 million.

Notion 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.

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 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.