KUALA LUMPUR (Sept 7): China Stationery Limited (CSL) had submitted an application to Bursa Malaysia for a waiver to submit a regularisation plan and upliftment from being a Practice Note 17 (PN17) company after the stationery maker recorded three consecutive quarters of net profit.

In a statement today, CSL, which fell into PN17 in July last year, posted a net profit of RM16.10 million for the fourth quarter ended Dec 31, 2014; RM9.41 million for the first quarter ended March 31; and RM6.15 million for second quarter ended June 30, 2015.

According to the Bursa Malaysia’s "Practice Note 17 Criteria and Obligations of PN 17 Issuers", the PN17 issuer must be able to record a net profit or positive operating cash flow in two consecutive quarter immediately after the completion of the implementation of the regularisation plan.

Commenting on the company’s developments, CSL’s chief executive officer and executive chairman Chan Fung @ Kwan Wing Yin said the company will focus on rebuilding and turning around its business back to profitability this year after the fire incident.

“We are back to normal operation since May and the group is in the process of winning back its old clients,” he added.

The company sunk into a net loss after a fire incident, which happened due to electrical short circuit at a section of the production area of Plant No 4 on April 4 last year. It had seriously affected the company’s production capacity, causing interruption to some of its operations.

CSL said it was classified as an affected listed issuer on July 8, 2014 due to the issuance of the disclaimer of opinion for its financial statements for the FY2013 by its external auditors Messrs RT LLP following the fire incident, not because of the losses for many consecutive quarters.

The auditors, however, had on Jan 15 this year completed its special audit on the financial accounts for the nine months financial period ended Sept 30, 2014 (9MFY2014) and found that the net loss was 16.7% lower at RMB330.95 million (RM224.87 million) compared to RMB396.72 million (RM269.56 million).

The deviation was due to the recognition of deferred tax assets from losses of RMB128.29 million (RM87.17 million) from the company’s indirect wholly-owned subsidiaries.

CSL rose 0.5 sen or 7.14% to close at 7.5 sen, for a market capitalisation of RM86.3 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)