Stock With Momentum: Aturmaju Resources

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This article first appeared in The Edge Financial Daily, on January 27, 2016.


Aturmaju Resources Bhd (-ve)

The share price of Aturmaju (Fundamental: 1.25/3, Valuation: 0.3/3) has continued to rise since it triggered our momentum alert on January 15, gaining a cumulative 20.3% to a new one-year high of 95 sen yesterday.

The session saw some 7.2 million shares changing hands, compared to its average 200-day volume of just 458,703 shares.

The Sabah-based timber product manufacturer has gained investors’ interest since December 31, 2015, as evidenced in the cumulative 58.3% surge of its share price in slightly more than three weeks on active trades. Before January, the stock was hardly traded.

Investors should note though that there have been no new material announcements since the company released its third quarter results on November 30, 2015 (3QFY15).

For 3QFY15, net loss narrowed to RM653,000 from RM1.4 million a year ago, on the back of a 14.8% year-on-year (y-o-y) decline in revenue to RM5.1 million. The lower revenue was attributed to lower demand, while the net loss was due mainly to higher administration costs incurred.

Despite a smaller net loss y-o-y, the loss in 3QFY15 wiped out Aturmaju’s earlier earnings.

Recall that the company managed to turn in a cumulative net profit of RM483,000 for 1HFY15 — on higher sales and margins as well as the absence of amortisation costs.

For 9MFY15, revenue grew 10.7% y-o-y to RM24.4 million, while its net loss narrowed to RM170,000, from RM3.2 million a year ago.

Aturmaju fell into the red in 2008 with a net loss of RM1.3 million, and has been loss-making since. In FY14, its net loss amounted to RM10.8 million.

On a more positive note, Aturmaju has pared down its borrowings to a net gearing of just 0.9% at end-September 2015, from 47.5% in 2010.