Cycle & Carriage Bintang Bhd (-ve)

Cycle & Carriage (Fundamental: 1.7/3, Valuation: 1.1/3) first triggered our momentum alert on April 7 at RM2.02 and has since gained 71.8% to close at RM3.47 yesterday.

The thinly traded stock saw renewed trading interest after its joint venture company, Mercedes Benz Malaysia, reported a 53% growth in passenger vehicle sales for 1H2015.

Cycle & Carriage is Malaysia’s largest dealer of Mercedes-Benz motor vehicles. It is also involved in retailing of motor vehicles and spare parts, servicing vehicles, and providing general insurance services. 

For 1Q2015, while revenue surged 41.2% y-o-y to RM263.1 million, net profit almost quadrupled to RM6.6 million, due to a moderation in margin pressure and continued demand for new models. Notably, net profit in 1Q2015 already accounted for 64.3% of its net profit of RM10.3 million in 2014. 

It has a solid balance sheet with net cash of RM79.2 million or approximately 26.1% of its market capitalisation.

This article first appeared in The Edge Financial Daily, on July 16, 2015.