Stock With Momentum: CNI Holdings

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This article first appeared in The Edge Financial Daily, on October 28, 2015.

CNI Holdings Bhd (-ve)

SHARES of CNI (Fundamental: 2.25/3, Valuation: 1.8/3) closed 5.3% lower at 9.0 sen yesterday in active trade. A total of 5.8 million shares changed hands, over 28 times its past 200-day average.

Notably, the company has been loss-making since 2013, while sales has been declining every year since 2008.

For 1H2015, the company suffered a net loss of RM1 million despite a 3.4% y-y increase in revenue to RM46 million. However, the loss was lower compared to a RM3.2 million loss in 1H2014. The improved performance was due to strong revenue growth in the manufacturing business.

Primarily a direct selling company, CNI is involved in the manufacturing, marketing and trading of healthcare and consumer products. The marketing and trading business accounted for about 80% of revenue last year. In addition, 20.7% of total revenue came from export markets.

The stock trades at 0.8 times book. Net cash stood at RM23.6 million, equivalent to 34.8% of its market capitalisation.