Golden Frontier Bhd ("GFB") is involved in the manufacture of corrugated fibreboard carton and other packaging products. In addition, it is also involved in property development in a small way. GFB's Packaging Division is based in Malaysia & Vietnam (with the Vietnam-based plant having commenced its operation in mid-2005).
Recent Financial Results
GFB's last 4 quarters' net profit amount to RM5.4 mil, which represents a 136%-increase over the net profit of the preceding 4 quarters. This was achieved on a 16%-increase in turnover for the same periods from RM94.8 mil to RM110.1 mil. The improvement performance was attributed to contribution from the Property Division as well as higher turnover & better margin from the Packaging Division.
Valuation
Based the last 4 quarters' EPS of 6.94 sen & its closing price of RM0.72 as at today (Jan 16), GFB is now trading at a PE of 10.4 times. At this multiple, GFB is deemed fairly valued.
Technical Outlook
GFB has been in a downtrend since making a high of RM1.18 in April 2002. It has however broken above that long-term downtrend line at the RM0.60 level in December last year (see Chart 1).
After that breakout, the share price of GFB hit a high of RM0.70 on December 4 before consolidation. From Chart 2, we can see that GFB has broken above the RM0.70 level yesterday (Jan 15). With this, it is likely that GFB's uptrend could continue. The only thing lacking in this breakout is volume.
Chart 1: GFB's monthly chart as at Jan 15, 2007
Chart 2: GFB's daily chart as at Jan 15, 2007
Conclusion
Based on reasonable valuation & nice technical set-up, GFB could be a good investment for the medium-term.
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