Stock With Momentum: China Stationery

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CHINA STATIONERY LTD (+ve)
CSL (Fundamental: 1.2/3, Valuation: 0.9/3), a manufacturer of plastic files, folders and ornament boards, saw renewed trading interest lately. The stock closed 5.3% higher at 10 sen on heavy volume, despite posting weaker 1Q2015 earnings results last Monday.

For 1Q2015, net profit slumped 71% to CNY15.6 million on a 77.8% drop in sales to CNY67.4 million. 

CSL was classified as a PN17 company after a disclaimer opinion was issued by its auditor in FY2013. The disclaimer was issued following the inability to quantify the extent of financial losses due to the suspension of its non-patented products business after a fire at its factory in April 2014.

The fire resulted in 40% loss in production capacity. However, production has started early last month, and should be reflected in next quarter’s financial statements.

Despite having an average cash level of CNY2,127.79 million in 2013, CSL earned only CNY7.16 million interest income or a yield of 0.34%.
 

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This article first appeared in The Edge Financial Daily, on May 21, 2015.