KESM marches to record high

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KUALA LUMPUR (May 14): KESM Industries Bhd share price marched to a record high today. The semiconductor stock jumped 15% or 46 sen to RM3.51, thanks to the trading interest in sector.

KESM (fundamental: 2.5; valuation: 2) was the second top gainer today; however, its trading volume was barely 770,400 shares.

According to InterPacific Securities’ remisier Sam Ng, semiconductor stocks such as Unisem (M) Bhd, Globetronics Technology Bhd and SKP Resources Bhd were on upward trend, besides KESM, which is principally involved in the provision of semiconductor testing and burn-in services.

“Interest in semiconductor stocks is back,” he told over the telephone.

Unisem rose 6 sen or 2.4% to RM2.56 with some 11.1 million shares done. Globetronics gained 6 sen or 1% to RM5.89 on trades of 764,700 shares.

SKP Resources climbed 6 sen or 6.3% to RM1.01 with some 18.4 million shares changed hands.

Ng added that KESM was undervalued, given its net tangible asset of RM5.87 based on in its second quarter results ended Jan 31, 2015.

Last week, The Edge Weekly highlighted the firm is poised to benefit from a “first-mover advantage” in the use of semiconductors in automotive applications.

This followed the approval secured from KESM shareholders on April 16 for the firm to acquire the remainder 34.62% stake it does not own in KESM Test (M) Sdn Bhd — the world’s largest independent semi-conductor testing outfit.

KESM chief executive officer Samuel Lim Syn Soo was quoted by the media saying that that KESM Test had expertise in the use of semiconductors in automotive applications and was the leader in the field.

“It is worth noting that KESM Test does not have a direct peer due to its full focus on automotive products.

“Its operations are scalable and the company enjoys a first-move advantage to capitalise on the rising demand,” The Edge Weekly quoted a semiconductor sector analyst.

(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.)