This article first appeared in The Edge Financial Daily, on February 26, 2016.

Fajarbaru Builder Group Bhd (+ve)

Shares of Fajarbaru (Fundamental: 1.55/3, Valuation: 1.8/3) continued to rise yesterday, after posting strong results for the second quarter ended Dec 31, 2015 (2QFYJun16). The stock closed up 3.7% or two sen at 56 sen yesterday, with 5.96 million shares changing hands.

For 2QFY16, revenue grew 35.2% year-on-year (y-o-y)to RM116.1 million, mainly due to Fajarbaru’s logging and timber trading segment, which commenced operations in January 2015.  Net profit expanded more than five-fold to RM8.3 million, from RM1.5 million a year ago. The increase in profits was mainly from the logging and timber trading segment.

For 1HFY16, revenue grew 33.7% y-o-y to RM225.5 million, while net profit increased 4.3 times to RM11.1 million.

Fajarbaru is primarily a construction company. The company has diversified into the timber and logging trading business in early 2015. The construction segment accounted for 78.2% of its revenue in FY15.

Going forward, the company will continue to focus on its construction segment, which is its core business. The segment is expected to deliver another challenging year of revenue growth, driven by several on-going projects being awarded that will be continuously implemented over the next couple of years. Fajarbaru will focus on replenishing its current order book, and will continue to actively tender for local construction projects.