Zen Tech International Berhad (KLSE:ZENTECH) shareholders will doubtless be very grateful to see the share price up 75% in the last quarter. But that's not enough to compensate for the decline over the last twelve months. During that time the share price has sank like a stone, descending 76%. The share price recovery is not so impressive when you consider the fall. It may be that the fall was an overreaction.
If the past week is anything to go by, investor sentiment for Zen Tech International Berhad isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
View our latest analysis for Zen Tech International Berhad
Given that Zen Tech International Berhad didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Zen Tech International Berhad saw its revenue grow by 76%. That's a strong result which is better than most other loss making companies. So on the face of it we're really surprised to see the share price down 76% over twelve months. Something weird is definitely impacting the stock price; we'd venture the company has destroyed value somehow. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Zen Tech International Berhad stock, you should check out this FREE detailed report on its balance sheet.
What About The Total Shareholder Return (TSR)?
We've already covered Zen Tech International Berhad's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that Zen Tech International Berhad's TSR, at -52% is higher than its share price return of -76%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
We regret to report that Zen Tech International Berhad shareholders are down 52% for the year. Unfortunately, that's worse than the broader market decline of 1.8%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Zen Tech International Berhad has 4 warning signs we think you should be aware of.