iHuman - A stock just breaking out in stage 2iHuman in FY2022 put its first ever profitable financial year. On top of this, despite rough macro conditions in #china, the company has been able to grow its revenue on an YoY basis.
Margins remains strong and with the reopening of China, earnings momentum is very likely to come back again. Gross margins are at 70%.
After a series of quarterly NI losses, they have put in 4 consecutive quarters of positive growth.
Liquidity position has improved rapidly (Current ratio from 2018 to 2022 has grown from 0.22 to 2.19).
They barely have any debt and their cash per share is 2.86 and book value of 2.10 as of Dec 2022.
Adjust cash per share and you are buying this stock for 90cents.
The stocks PE is 8.67x while its industry PE is 18x.
Technically, the stock is still a fresh stage 2. A couple of sessions back, IH managed to breakout above its AVWAP from the most recent high on strong volume. With the recent throwback on very low volume, a long entry with a stop below 3.03 seems a solid trade.
Target price is around 5.00 - 5.30 assuming prices have a successful breakout above 4.30 - With a risk of 73c and a target worth 154c, the trade provides a R/R of 1:2.11
