Stock With Momentum: Hap Seng Consolidated

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This article first appeared in The Edge Financial Daily, on February 2, 2016.


Hap Seng Consolidated Bhd (-ve)

SHARES in Hap Seng (Fundamental: 1.3/3), Valuation: 2.1/3) gained 5.88% or 40 sen to close at a one-year high of RM7.20 last Friday, with over 2.51 million shares changing hands.

On Jan 18, Hap Seng entered into an equity transfer agreement with Lei Shing Hong Trading Ltd to purchase Lei Shing Hong Wood Products Ltd (LSHWP) for US$3.2 million. LSHWP is involved in the trading of plywood and general trading. The acquisition was completed on Jan 22.

Hap Seng’s businesses include plantation, property, credit financing, automotive, fertiliser trading, and quarry and building materials.

For the nine months ended Sept 30, 2015 (9MFY15), net profit expanded 47.1% year-on-year to RM831.03 million, on the back of a 20% increase in revenue to RM3.34 billion. The higher net profit was due to a gain on the disposal of Hap Seng Capital Pte Ltd amounting to RM508.8 million, which was completed on June 16, 2015.

The stock trades at a trailing 12-month P/E of 14.4 times and 3.4 times book.