Stock With Momentum: Muar Ban Lee Group

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Muar Ban Lee Group Bhd (-ve)
MBL (Fundamental: 1.95/3, Valuation: 1.4/3) added 4.4% yesterday to close at 82.5sen, while trading volume rose to more than 5 times its 200-day trading average of 41,039 shares.

The renewed investor interest came after the company announced a MOU to dispose of its subsidiary, Sokor Gemilang Ladang Sdn Bhd. The oil palm plantation unit was acquired in 2014 for RM24.75 million, as part of its strategy to diversify upstream.

However, the latest 2014 results saw MBL’s revenue and profits decline by 6% and 35% to RM47.3 million and RM4.1 million, respectively, due to losses at Sokor Gemilang Ladang. It will now be sold for a total cash consideration of RM35.1 million.

Proceeds from the disposal will provide for future working capital requirements, reduce borrowings and contribute to the expansion of its core business. MBL designs and builds oil seed crushing machinery including waste treatment plants for palm oil mills.

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This article first appeared in The Edge Financial Daily, on April 30, 2015.