Is it safe to buy zen tech international berhad at 0.01
9/11/2024 10:41am
**Investing in Zen Tech International Berhad (KLSE: ZENTECH) at its current price of RM 0.01 would be risky.** Here's why:
1. **Significant Share Price Decline**: The stock has experienced a substantial one-year loss of 57%, and a three-year loss of 77%. This indicates a prolonged period of underperformance, which could be a reflection of underlying issues with the company.
2. **Revenue Growth**: While the company has shown revenue growth, it has not been enough to offset the share price decline. The market may be expecting stronger performance given the revenue growth.
3. **Cash Burn**: The company has a short cash runway, with a cash burn rate that has decreased but remains high. This short runway suggests that the company may need to raise cash soon, which could be stressful for shareholders.
4. **Earnings**: The company has not been profitable in the last twelve months and has a net loss. The market typically gives higher valuations to profitable companies, which may not be the case for Zen Tech International Berhad.
5. **Market Sentiment**: Investor sentiment is not positive, as evidenced by the significant share price decline. This could indicate a lack of confidence in the company's future prospects.
6. **Valuation**: The stock is trading at a premium compared to its fair value estimate, which could suggest that it is overvalued.
In conclusion, while there is some revenue growth, the significant share price decline, lack of profitability, and negative market sentiment all point to a risky investment environment for Zen Tech International Berhad at its current price. Investors should carefully consider these factors and their own risk tolerance before making an investment decision.