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Stock With Momentum: Resintech

TheEdge Tue, Jan 19, 2016 10:46am - 3 years ago


This article first appeared in The Edge Financial Daily, on January 19, 2016.

 

Resintech Bhd (-ve)

PLASTIC products manufacturer Resintech (Fundamental: 1/3, Valuation: 2.6/3), which last triggered our momentum algorithm in early December, rose 6.9% in active trade to close to a 3-year high of 47 sen yesterday.

The low-profile company attracted investors’ attention on Nov 30 when it announced an interim dividend of 2.5 sen per share— its first dividend since 2011, giving a yield of 8.7%. 

For its financial year ended March 31, 2015 (FY15), net profit jumped 18% y-o-y to RM5.9 million on the back of a 7% growth to RM91.9 million. The plastics company attributed the improved performance to the pre-goods and services tax buying rush and lower crude oil prices, which lowered raw material costs. 

However, the company expects a challenging FY16 due to weaker domestic demand and ringgit. For 1HFY16, net profit declined 17% y-o-y to RM0.7 million, affected by a 22% drop in sales and higher operating costs. 

The stock trades at a trailing P/E of 9.7 times and half its book value. 

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