Notion Vtec

Notion Vtec is one of my very first stock which I started to accumulate since Nov 2009. Until now, it is still the heaviest load in my portfolio. Many people have unload this stock since it reached the historical height of 3.52, the heat from private placement of Nikon seem faded. Is it still worthy to hold and buy in more Notion Vtec at current price?

Looking at their financial statement, it seem to me that Notion still got more upside. If based on their past 5 years financial results, notion recorded a Revenue CAGR of 16.82%, Gross profit CAGR of 18.10% and Net profit CAGR of 21.97%. I guess you cant find much company to have such outstanding growth in Bursa at the moment (if you do, please inform me).

They also have a very high profit margin of above 20% for the pass few years which is higher than their HDD peers listed in KLSE like JCY(11%) and Dufu(8-10%). The reason behind this mainly contribute by their camera division which have a much higher margin than HDD manufacturing.

Notion average Capital expenditure/net profit also stand at a comfortable 62.8% compare to their bigger peer, JCY at 76%. This mean less money needed to maintain or upgrade the equipments, resulting in min 40% increase in retain earning and min 20% increase in ROE for the pass few years.

The past record seem good enough, how about the future?

1) The new 2.5' HDD base plate for Samsung is the catalyst to growth, which could provides additional 46m in rev and13m gross earning, full capacity estimated at Jun 2010 with high possibility of increase order from samsung.

2) Proven ability to produce 2.5' base plate could attract more customer, especially their existing clients like WD and Seagate. Currently, Notion is in talks with potential client Alphana Tech to supply 2.5' base plate.

3) Continental also discussing a new packages with Notion. If succeed, this could be a boost to their automotive division.

4)For their camera division, the real deal behind private placement from Nikon doenst stop here. I believe Nikon will order additional camera parts and possible sub-assemblies for Notion in near future.

With this wonderful past record and promising growth catalysts mentioned above, I dont see any reason for me to sell my stack on Notion at the moment.