Stock With Momentum: Chin Well Holdings

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Chin Well Holdings Bhd (-ve)
Chin Well (Fundamental: 2.1/3, Valuation: 2/3) first triggered our momentum alert yesterday on rising volume. The stock ended flat at RM1.55. 

The carbon steel fasteners manufacturer had, last Monday, announced that Tsai Yung Yu, a co-founder of the company, ceased to be a substantial shareholder. This follows Tsai’s transfer of his 32.6% stake in Benua Handal Sdn Bhd to his brother Tsai Yung Chuan’s immediate family members. 

Currently, Yung Chuan — who is also Managing Director of Chin Well — remains the controlling shareholder with a 52.9% deemed stake held via Benua Handal. 

For 9MFYJune2015, revenue increased 4.5% to RM372.9 million while net profit surged 38.6% to RM28.2 million, due to sales of higher-margin products such as Do-It-Yourself products and wire panel fences. 

Export accounted for 76.4% of total sales in FY2014. Key markets include Europe (57.8%) and Asia ex-Malaysia (10.7%). 

The stock trades at a trailing 12-month P/E of 11.4 times and 1.07 times book.

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This article first appeared in The Edge Financial Daily, on July 3, 2015.