KUALA LUMPUR (Nov 13): Focus Lumber Bhd rose as much as 9% after Insider Asia said the wood product manufacturer's large cash pile might prompt the firm to acquire rivals or pay more dividends to shareholders.

As at 12.05pm, Focus Lumber has risen as much as 10 sen to RM1.25.
 
"With a large cash pile and many other competitors having taken a beating in recent years, it will be interesting to watch if Focus Lumber will look at acquiring weaker competitors at depressed prices.

"On the other hand, it could also consider returning more cash to shareholders," Insider Asia said.

Insider Asia's report is published in The Edge Financial Daily and theedgemarkets.com
today.

According to Insider Asia, Focus Lumber has net cash of RM60.7 million as at June 30, 2014. This translates into 58.8 sen per share.

Insider Asia said Focus Lumber has managed to maintain its profitability and consistently paid dividends. This was despite less-than-favourable market conditions for wood players in the past few years due to sluggish housing markets in the US and Europe.

"Turnover for the company was stable between RM120 million and RM148 million from 2010 to 2013, resulting in net profit of between RM10 million to RM16 million over the same period," Insider Asia noted.

Focus Lumber's valuations may also attract investor interest. Insider Asia said Focus Lumber shares were traded at a discount of 10 sen or 8% to its book value of RM1.26.

In price-earnings ratio (PER) terms, Insider Asia said Focus Lumber's trailing 12-month PER was low at seven times. Bloomberg data showed that the sector average PER was at nine times.