Stock With Momentum: Fajarbaru

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This article first appeared in The Edge Financial Daily, on October 13, 2015.


SHARES of construction and logging company Fajarbaru (Fundamental: 1.15/3, Valuation: 1.8/3) rose 1 sen or 2.2% to close at 47.5 sen yesterday. 

Last Friday, the company’s 51%-owned subsidiary, Smooth Accomplishment Sdn Bhd, announced that it won a RM3.2 million contract from AK Timber Sdn Bhd to undertake the extraction and sale of timber in Pahang. The contract is expected to contribute positively to Fajarbaru’s FYJun2016 and FY2017 results.

Note that the company only diversified into the timber and logging trading business in early 2014.

For FY2015, Fajarbaru’s revenue increased 23.6% to RM387.5 million. However, it slipped into the red with a net loss of RM2.6 million, hit by impairment losses on trade receivables and property, plant and equipment amounting to RM8.3 million. 

Fajarbaru sits on a net cash position of RM6.2 million and trades at 0.75 times book. It paid out a 1.25 sen dividend in July, which equates to a net yield of 2.7%.