GE-Shen Corporation Bhd (+ve)

GESHEN (Fundamental: 2.2/3, Valuation: 1.1/3), a manufacturer of high precision plastic moulded products and components, was last picked by our system on April 23 at 72.5 sen. Since then, the stock fell to a low of 65.5 sen before rebounding to a new 3-year high of 77 sen yesterday.

Last month, Geshen announced its 1Q2015 earnings results. Although revenue dipped 11.3% y-o-y to RM17.73 million, net profit almost doubled to RM1.17 million, mainly due to a RM659,000 loss on discontinued operations in 1Q2014. Excluding the one-off item, net profit actually declined 5.5% y-o-y.

From 2010-2014, sales ranged between RM83.8-RM89.6 million while net profit increased from only RM228,000 to RM2.6 million. Geshen is in the midst of acquiring a 75% stake in Polyplas Sdn Bhd, a manufacturer of plastic parts, for RM33.76 million.

The stock trades at a trailing 12-month P/E of 17.8 times and 1.15 times book. The company last paid dividends for FY2006. 

This article first appeared in The Edge Financial Daily, on June 11, 2015.