KUALA LUMPUR (July 7): Speculation of a possible takeover has pushed Mieco Chipboard Bhd’s shares to a five-year high of 87 sen this afternoon.

At 4.16pm, Mieco Chipboard (valuation: 0.9; fundamental: 0.65) was up 4 sen or 5% at 84 sen, making it the 28th top gainer of the day — with 11 million shares done. The current price gives it a market capitalisation of RM176.4 million.

A senior research analyst with a local investment bank told theedgemarkets.com that there were talks in the market about Mieco Chipboard regarding a possible takeover by a local company, which could have led to the rise of the share price.

“I am not sure if it will take place or not but that is the speculation in the market place. It is supposedly a local M&A,” he said.

Recall that Mieco Chipboard saw the emergence of Purnama Kuantum Sdn Bhd as the single largest shareholder, who purchased some 119.19 million shares or 56.76% stake in the company in January this year.

Purnama Kuantum bought the shares from Ambang Sehati Sdn Bhd and BRDB Developments Sdn Bhd.

When contacted, an official from Mieco Chipboard said he did not know the reason behind the current price rally and surge in trading volume.

The official added that the share price movement depended on market forces.

"We just concluded our annual general meeting last month. We updated (shareholders) on the latest development in the company that (might have) boosted shareholders' confidence," the official said.

Mieco Chipboard is principally engaged in the manufacturing of particleboards, which are commonly used as a core material for home and office furnitures.

In the first financial quarter ended March 31, 2015 (1QFY15), the company returned to the black with a net profit of RM3.2 million compared with a net loss of RM3.17 million a year ago; revenue was at RM80.28 million, up 6% from RM75.75 million in 1QFY14.

(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.)