Stock With Momentum: KESM Industries



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KESM Industries (-ve)

Shares of the usually illiquid KESM (Fundamental: 2.5/3 Valuation: 2.0/3) rose to a 3-year high of RM3.67 on Tuesday, after the release of its 3QFYJuly2015 earnings results. The stock added another 2.7% to close at RM3.77 yesterday.

For 9MFY2015, sales increased 4.6% to RM194.2 million, while net profit was up a sizeable 56.5% to RM6.6 million, mainly due to lower raw materials and consumables used as a result of reduced electronic manufacturing services sales. 

KESM is engaged in specialized electronic manufacturing activities, primarily the provision of burn-in services to the semiconductor industry.

It has a strong balance sheet with net cash of RM52.4 million or 33.2% of its market capitalization of RM157.86 million. 

The stock is trading at a trailing 12-month P/E of 12.3 times and 0.63 times book. Dividends totalled 3 sen for FY2014, giving a net yield of 0.8%. Historically, the company pays out 10%-30% of its net profit as dividends.


This article first appeared in The Edge Financial Daily, on June 4, 2015.