This article first appeared in The Edge Financial Daily, on December 10, 2015.

KBES Bhd (-ve)

SHARES of KBES (Fundamental: 0.2/3, Valuation: 0.9/3) triggered our algorithm yesterday, closing 4.4% to 36 sen. Investors should exercise extra caution when trading its shares as it has been ‘Red Flagged’ by our algorithm due to its weak fundamentals.

For 3Q2015, revenue slumped 51.9% y-y to RM7.2 million, hit by a 41% reduction in ticket sales. As a result, net loss widened to RM2.9 million from a net loss of RM0.8 million in 3Q2014. 

Notably, it posted a negative EBIT of RM4.0 million for 9M2015 while net gearing increased to 22.7% from 7.3% as at end-2014. 

KBES is primarily engaged in provision of express bus services, which accounted for 82% of its 2014 revenue. The company also has interest in fabrication of coach bodies and maintenance services.

Loss-making since 2014, the stock currently trades at 0.8 times book. The company did not pay any dividend in the past 10 years.