Stock With Momentum: Hiap Teck Venture

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This article first appeared in The Edge Financial Daily, on March 25, 2016.


Hiap Teck Venture Bhd (+ve)

SHARES of Hiap Teck Venture Bhd (fundamental: 0.35/3; valuation: 1.2/3) jumped 3.28% to close at 31.5 sen after hitting an intraday high of 32.5 sen. yesterday. The share price movement came after 5.32 million shares changed hands, compared to its 200-days average volume of 432,720.5.

In the group’s first quarter financial year 2016 (1QFY16), it recorded a net loss of RM37.22 million compared to a net profit of RM2.85 million in 1QFY15, mainly due to share of loss of jointly controlled entity of RM50.21 million in the reporting quarter. 

The jointly controlled entity’s losses were due to unrealised foreign exchange loss arising from USD denominated shareholders’ loan and the higher cost associated with trial production. To minimise its losses, the jointly controlled entity has temporarily suspended its trial production in October 2015.

Its revenue for the quarter, however, grew 3.22% to RM317.37 million in 1QFY16 compared to the preceding year corresponding quarter’s revenue of RM307.46 million.

In a filing to Bursa, Hiap Teck said that the trading division saw a growth of 2.65% as compared to preceding year corresponding quarter, mainly due to higher export sales recorded by its Singapore subsidiary, while its manufacturing division achieved higher sales volume but lower revenue of RM139.86 million as compared to RM146.95 million in the preceding year's corresponding quarter, mainly due to lower selling prices following the depressed global steel prices.

On March 16, Hiap Teck announced that the Royal Malaysian customs department (RMCD) has completed its audit in respect of two of its subsidiaries, and RMCD has returned all documents taken into account and released all bank accounts of subsidiary frozen for the purpose of audit.

Following that, its share price, which dropped to its all-time low on January 29 of 20.5 sen per share, rebounded.