Stock With Momentum: Dufu Technology Corp

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This article first appeared in The Edge Financial Daily, on November 18, 2015.

Dufu Technology Corp Bhd (-ve)

SHARES of hard disk drive (HDD) component maker Dufu (Fundamental: 1.4/3, Valuation: 1.1/3) closed 2.7% higher at 38 sen yesterday with 4.2 million shares changing hands.

Loss-making from 2011-2013, the Penang-based company had also diversified into non-HDD business, such as sensor controls and the medical devices. Export sales, mostly to Thailand, China and Singapore, accounted for 75.4% of its revenue in 2014.

Dufu returned to the black in 2014 with a net profit of RM6.3 million, mainly due to a one-off gain of RM6.24 million on disposal of a subsidiary which owns a two-storey factory to Inari Amertron Bhd. For 1H2015, it posted a net profit of RM3.2 million compared to a net loss of RM0.3 million a year ago, boosted by foreign exchange gain of RM4.1 million.  

The stock trades at a trailing 12-month P/E of 6.9 times and 37% below book value. No dividend was paid in the past five years.