Stock With Momentum: Focus Lumber

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This article first appeared in The Edge Financial Daily, on September 23, 2015.

Focus Lumber Bhd (+ve)

FOCUS Lumber (Fundamental: 1.95/3, Valuation: 2.4/3) was InsiderAsia’s stock pick featured on 11 December, 2014. Since then, the stock has gained 67% to end at an all-time high of RM1.74 yesterday.

The Sabah-based plywood manufacturer stands out for three reasons:  fairly consistent earnings, a strong balance sheet and attractive dividend yields. It is also an exporter, benefitting from the weak ringgit and improving overseas demand for its products.

Net profit ranged from RM10 million to RM16 million over the past five years. As at end-June, the company is in a net cash position of RM85 million, translating to 82.3 sen per share, or 48.7% of its share price.

Dividends increased to 8 sen in the last two years, giving an attractive yield of 4.7%. For 2015, Focus Lumber paid an interim dividend of 5 sen per share in August.

The stock is trading at a trailing 12-month P/E of 8.8 times and 1.2 times book.