Stock With Momentum: Dufu Technology Corp

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This article first appeared in The Edge Financial Daily, on January 19, 2016.


Dufu Technology Corp Bhd (+ve)

SHARES of hard-disk drive (HDD) component maker Dufu (Fundamental: 1.7/3, Valuation: 2.4/3) continued to see heavy trading volume since it received an unusual market activity query from Bursa Malaysia last Wednesday. 

Loss-making from 2011-2013, the Penang-based company has diversified into non-HDD businesses such as sensor controls and medical devices. 

Dufu returned to the black in the financial year ended Dec 31, 2014 (FY14) with a net profit of RM6.3 million, mainly due to a one-off disposal gain of RM6.2 million. Export sales, mostly US dollar-denominated, accounted for 75% of its revenue in 2014.

For 9MFY15, revenue grew 32% y-o-y to RM122.7 million on a 77% increase in HDD sales. Meanwhile, core net profit expanded 10.3 times to RM7.8 million, boosted by forex gains of RM6.2 million.

Dufu subsequently declared its first dividend (2 sen) since FY10, giving a 5% yield. The company has been paring down its borrowings over years and has turned into a net cash company in 2QFY15.