Stock With Momentum: Frontken Corp Bhd

This article first appeared in The Edge Financial Daily, on August 8, 2018.
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Frontken Corp (-ve)
TRADING of the shares in Frontken Corp (fundamental: 2.20/3, valuation: 1.10/3), whose stock price settled four sen or 6.7% higher at 64 sen yesterday, saw 160.08 million shares traded, about 15 times its 200-day average volume of 10.68 million shares.

Hong Leong Investment Bank (HLIB) initiated coverage on the stock with a “buy” rating yesterday, citing a bullish semiconductor market, robust semiconductor fabrication plant (fab) investment, and an oil and gas recovery.

“Frontken has a strong balance sheet and we foresee it may adopt a dividend policy,” HLIB analyst Tan J Young wrote in a research note.

HLIB gave the semiconductor services provider a fair value of 84 sen, representing 18 times its 2019 financial year earnings per share, adding the valuation is in line with the average global suppliers to the fab industry.

The company posted a net profit of RM12.08 million in the second quarter ended June 30, 2018, more than twice the RM5.83 million it posted a year ago.