Analabs Resources Berhad ('Analabs') is an investment holding company, which is involved mainly in the recovery and sale of recycled products primarily in Malaysia and Singapore. One of its subsidiaries, Coveright Surfaces is involved in the manufacturing and sale of resin impregnated papers. (Note: My first post on this stock was in March 2010 but the stock did not sizzle.)
Recent Financial Results
Analabs has just announced its results for QE30/4/2011, where its net profit jumped 104% q-o-q or 91% y-o-y to RM7.1 million while its turnover was up 9% q-o-q but declined by 2% y-o-y to RM36 million. The company attributed its improved bottom-line to higher turnover and/or higher sale of better margin products, i.e. resin impregnated papers.
Table 1: Analabs's last 8 quarterly results
Chart 1: Analabs's last 18 quarterly results
Valuation
Analabs (closed at RM1.59 yesterday) is now trading at a PE of 5.3 times (based on last 4 qaurters' EPS of 29.8 sen). At this PE multiple, Analabs is deemed fairly attractive.
Technical Outlook
Analabs is still in an uptrend line, with support currently at RM1.60. It broke above its medium-term downtrend line at RM1.55-1.57 in May but the stock only enjoyed a short-lived rally to RM1.70 before retreating back to its uptrend line.
Chart 2: Analabs's weekly chart as at June 28, 2011 (Source: Quickcharts)
Conclusion
Based on improved financial performance, attractive valuation & positive technical outlook, Analabs is a good stock for medium to long-term investment.
4 comments:
Hi, Alex. I am also interested in this stock. I wish to ask you a question. Do you think that Analabs would able to continue performing as good as its quarterly ended 30 April 2011?
Thanks.
Hi LuPorTi
I think so. Analab's business is fairly stable and may sustain fairly well even in an economic slowdown. However, the share price may suffer as investors' sentiment would be less bullish.
Hi Alex,
How is Analabs performing now? Are they still doing well in melamine imprenated papers business?
Hi J Carlos Horna E
Analab acquired 100% equity interest in Coveright Surfaces Malaysia Sdn Bhd ('Coveright Surfaces') for a cash consideration of RM40.0 million.
Since then, its quarterly revenue increased from ~RM15 million to ~RM35 million. So, the new business gives an annual revenue of RM80 million.
However, its bottom-line remains unchanged at RM3-4 million per quarter. It could mean that the new business did not contribute to the bottomline (which is unlikely) or the contribution to bottomline was more than offset by decline in other business segments' contribution. I believe the latter is more likely the case as Coveright Surfaces, which manufactures laminate flooring film & decorative melamine film for the furniture industry, should have benefited from the recovery in the furniture industry in the past 1 year.
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