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Not too high... just saying the price movement is way too discouraging... it is ripping pocket by diving bit by bit everyday (understand the current sentiment, but no sign of slight rebound at all since BI is outrageous) although the fundamentals is bearable. Suspecting creative accounting in view of high COGS and the profit is pumped by other income which Mgmt chose to be silent on it.
Point 1:
Edelteq owns 24% of Solid Point Precision Manufacturing. Solid Point operates upstream in the semiconductor supply chain. The business is already profitable. Solid Point recorded a strong profit increase, with net profit rising more than 3.5 times to RM10.19 million in 2024. This allows Solid Point’s profit to be consolidated as the share of results of an associate. Over time, this can increase Edelteq’s reported net profit. Edelteq can also source precision parts from Solid Point. This can help lower costs and improve margins in Edelteq’s electronics, assembly, and consumables businesses. Solid Point also shows strong revenue and profit growth. The company has traits commonly seen in IPO-ready businesses.
Point 2:
Edelteq has a market capitalisation of RM249 million and trades at about RM0.43 per share. In its latest quarter, Edelteq recorded RM83.7 million in revenue and RM3.4 million in profit. This shows strong revenue scale for a small-cap company. THMY has a much larger market capitalisation of RM817 million and trades at about RM0.92 per share. THMY reported RM14.1 million in quarterly revenue and RM3.8 million in profit. This places Edelteq lower on the market-cap map but much higher on the revenue scale.
Point 3:
Edelteq plans to issue 292.9 million free warrants on a one-for-two basis. This allows the company to raise future funds only when warrants are exercised. A similar case is Southern Cable Group Berhad, which issued bonus warrants on a one-for-two basis in 2022. After the exercise, both the mother share and warrant performed strongly. Southern Cable now trades at about RM2.09 for the mother share and RM1.92 for the warrant. This shows how bonus warrants can increase market interest and liquidity when the business continues to perform.
