Leader- a good long-term investment

Leader is the largest manufacture of cable & wire in the country as well as being the 12th largest in Asia. In addition to the manufacturing of cable & wire, the group is also venturing into power-generation in Cambodia, where it is scheduled to complete its 200MW coal fired power plant in Sihanoukville in 2012.

Leader has just announced its results for 2Q2008 ended 30/6/2008, where its net profit increased by 16.4% q-o-q or 13.9% y-o-y to RM18.1 million. Its turnover increased by 6.0% q-o-q to RM678 million from RM640 million, but declined 4.4% y-o-y from RM709 million recorded in 2Q2007.



Leader's financial performance has improved quite significantly in the past 4 quarters, when compared to the preceding 4 quarters. During the periods under consideration, its net profit increased by 54% from RM46.5 million to RM71.5 million, while turnover increased by 10% from RM2.58 billion to RM2.84 billion. EPS has similarly improved from 11 sen to 16 sen. Based on its closing price of RM0.595 as at August 22nd, Leader is now trading at a trailing PE of 3.7 times or at a P/Book of 0.6 times (based on a NTA of RM1.08 per share as at 30/6/2008). At these multiples, Leader is deemed attractive.

From the chart below, we can see Leader is resting on its medium-term uptrend line, with support at RM0.55-56. This coincides with its horizontal support of RM0.55.


Chart: Leader's weekly chart as at August 22nd (source: Quickcharts)

Based on improving financial performance, attractive valuation & good support from the technical perspective, Leader should be a good long-term investment.