Stock With Momentum: Hap Seng Consolidated

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Hap Seng Consolidated Bhd (-ve)

Hap Seng Consolidated (Fundamental: 1.3/3, Valuation: 2.1/3), a well-diversified conglomerate, was first picked by our momentum algorithm yesterday, closing down 5.1% to RM5.20. The stock, however, has trended higher for the better part of the last 3 years, rising at a CAGR of 52.6%.

The company’s businesses include plantation, property, credit financing, automotive, fertilizer trading, and quarry and building materials. Despite relatively flat revenue, net profit grew by a 3-year CAGR of 26.1% to RM753.5 million in 2014. 

For 1Q2015, though revenue rose 25.9% y-o-y to RM1.1 billion, net profit declined 11.6% to RM110.9 million, due mainly to lower profit from plantation and property segments. With a net debt of RM2.8 billion, its gearing stood at 68.4% at end-March.

On June 16, Hap Seng Consolidated completed its disposal of Hap Seng Capital Pte Ltd, a financial services provider, for RM640.8 million — of which RM395 million was subsequently used to acquire Menara Hap Seng KK, currently being constructed, in Kota Kinabalu, Sabah.

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This article first appeared in The Edge Financial Daily, on April 27, 2015.