This article first appeared in The Edge Financial Daily, on November 16, 2015.

Aluminium Company Of Malaysia Bhd (-ve)

ALCOM (Fundamental: 2.25/3, Valuation: 1.8/3) triggered our momentum algorithm for the first time last Friday, closing up 3.6% to 71.5 sen with only 64,500 shares traded.

ALCOM is a leading supplier of aluminium rolled products in Southeast Asia. It is majority-owned by US-based Novelis Inc, a global leader in aluminium rolling and can recycling. In FYMar2015, the Klang-based company derived 59% of its sales from Asia ex-Malaysia.

For 1QFY2016, revenue increased 4.2% y-o-y to RM68.9 million, bolstered by higher average aluminium prices and stronger USD, which more than offset the 6.5% decline in sales volume. It posted a small net profit of RM36,000, compared to a net loss of RM1.2 million in 1QFY2015.

ALCOM was loss-making in the past three years, mainly due to stiff pricing pressures and higher input costs. However, it generated steady operating cash flows and has net cash of RM46.0 million. Dividends totalled 5 sen for FY2015, giving an above-average yield of 7.0%.