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Focus Lumber Bhd (-ve)

TONG’S Momentum Portfolio bought Focus Lumber (Fundamental: 1.75/3; Valuation 3/3) on Tuesday, after the stock was picked by the proprietary algorithm on positive momentum. The stock has since yielded a substantial 8.4% return and was sold yesterday, after momentum turned negative, according to the algorithm. This suggests some profit-taking may be in store after the strong rally. The Sabah-based company manufactures plywood, veneer and lumber products, exporting some 92.5% of sales, with 67% going to US market in 2013. As such, it benefits from the strong USD. In 4Q2014, net profit increased 15.5% to RM5.07 million on the back of a 5.3% increase in revenue to RM41.39 million. For the full year, net profit rose 5.9% to RM16.03 million while revenue increased 2.1% to RM150.41 million. The stock is trading at 0.97 times book and a trailing 12-month P/E of 7.92 times. It has paid annual dividends of 8 sen since 2011, giving shareholders a high 7.2% yield.

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This article first appeared in The Edge Financial Daily, on February 12, 2015.

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