Suiwah Corporation Bhd ("Suiwah") is involved in 2 main lines of business i.e. retailing and manufacturing of Flexible Printed Circuit ("FPC") boards.
Past & Future Financial Performance
From the above, we can see that Suiwah's turnover has enjoyed a compounded growth rate of about 14% for 5 years from RM 221.9 mil in FYE 2000 to RM 416.8 mil in FYE 2005. During that period, its net profit had tripled from RM 8.3 mil to RM 25.7 mil. Based on S&P's research report dated April 28, Suiwah is expected to report a net profit of RM 26.2 mil for 2006 on the back of turnover of RM 478.4 mil. 2006 EPS is forecast to be about 43.0 sen.
Current Financial Performance
If you compared the last 4 quarterly results with the preceding 4 quarterly results, you can see that net profit has increased by 18.32% from RM 22.1 mil to RM 26.1 mil. This is achieved on the back of a 2.5%-incraese in turnover from RM 410.4 mil to RM 420.8 mil. As a result, EPS has increased by 11.3% from 38.46 sen to 42.82 sen.
Valuation
Based on the closing price as at July 12 of RM2.00, the stock is trading at a PE of 4.7 times or 0.8 times its book value. This is fairly cheap.
Technical Outlook
The chart below shows that the stock is in a gradual long-term uptrend. We can see that the RM2.00 levels should been a strong uptrend line support.
Suiwah's monthly chart as at July 12, 2006
Future Prospect
Suiwah has planned to divest its FPC boards manufacturing division, known as Qdos, to its shareholders. This exercise could be the catalyst for a re-rating of this stock.
Weakness noted
The main weakness is the stock has very low trading volume.
Recommendation
Based on cheap fundamental valuation & fairly good technical outlook, I would recommend a BUY for Suiwah at the current price of around RM2.00.
No comments:
Post a Comment