Choo Bee is principally involved in the manufacturing of flat based steel products and trading in a comprehensive range of flat and long based steel products such as structural steel and building materials. Examples of products manufactured by the Group include a wide range of steel pipes, flat bars, sheets and plates, purlins, lipped channel, hollow sections, decorative and string pipes. In addition, the Group also manufactures flat based stainless steel products and provides steel servicing, a pre-production service to customers with products that have steel as a component such as shearing of sheets and slitting of coils.
Recent Financial Performance
After a short period of poor performance in second half of 2005 (i.e. QE30/9/05 & QE31/12/05), Choo Bee’s financial performance rebounded in the last 2 quarters. The latest quarterly result for QE30/6/06 shows a substantially higher net profit of RM8.7 mil, which represents an increase of 34.1% q-o-q or 37.5% y-o-y. Turnover of RM88.3 mil has only increased marginally over the preceding quarter’s turnover of RM87.5 mil but representing a 16.3% growth over the previous corresponding quarter’s turnover.
Valuation
Based on the last 2 quarterly EPS totaling 14.52 sen, we can compute the full-year EPS to be about 29.04 sen. At a closing price of RM1.70 as at Oct 26, Choo Bee is trading at a PE of 5.9 times only.
Technical Outlook
From the chart below, we can see that Choo Bee has broken above its downtrend line in March. It is consolidating in an ascending triangle with the resistance at RM1.74 level. A break above that level could be the beginning of a bullish upside move for Choo Bee. If on weakness, the stock were to drift down, we can expect support at RM1.50 level. The latter could be a good level to gain entry into Choo Bee.
Chart: Choo Bee's weekly chart as at Oct 26
Conclusion
Based on attractive valuation & fairly interesting technical set-up, Choo Bee is a good investment for both medium- & long-term.
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