Stock With Momentum: Denko

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This article first appeared in The Edge Financial Daily, on January 4, 2016.


Denko Industrial Corporation Bhd (-ve)

SHARES of Denko (Fundamental: 0.8/3, Valuation: 1.1/3) saw active trading last Thursday, rising 4% to close at 39 sen. Some 15.4 million shares changed hands, compared to its average 200-day trading volume of 2.1 million shares. 

Johor-based Denko operates in two segments: manufacturing of plastic injection moulding and high precision plastic parts; and wholesaling of foodstuff and consumer goods. Over the past five years, it alternated between profit and loss, before returning to the black in FYMarch2015. 

For 1HFY2016, revenue grew 14.9% y-y to RM44.3 million, due to increased contribution from the manufacturing division. Profit before tax, however, more than tripled to RM0.9 million, boosted by forex gains of RM0.5 million.

The company has seen a series of boardroom changes since May, including the appointment and resignation of its previous group Chief Executive Officer, Dr Loh Yee Feei. 

The stock trades at a trailing 12-month P/E of 10.5 times and 0.7 times book.