This article first appeared in The Edge Financial Daily, on November 9, 2015.

Sern Kou Resources Bhd (-ve)

SHARES of furniture maker Sern Kou (Fundamental: 0.55/3, Valuation: 0.9/3) triggered our momentum alert for the second consecutive trading day, closing down 2.2% to 66 sen last Friday. 

Besides wooden furniture manufacturing (33.6% of revenue in FYJune2015), the Muar-based company is also involved in upstream activities — timber processing (45.7%) as well as logging of rubber and tropical wood (20.7%). Meanwhile, Sern Kou derived 27.6% of its revenue from export markets, including the US, Europe, and Africa. 

For FY15, revenue grew 25.8% to RM109.5 million, mainly due to new contribution from its wood extraction activities, which commenced in 2QFY15. Net profit expanded to RM2.2 million, compared to RM86,384 a year ago. 

In June, the company terminated its proposed acquisition of B Cor Geotechnics Sdn Bhd (BCor), due to unsatisfactory 1Q15 results for the latter. Sern Kou had, in January, proposed to acquire BCor, a construction and piling company, for RM1.2 million.