Stock With Momentum: KESM Industries

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This article first appeared in The Edge Financial Daily, on January 7, 2016.


KESM Industries Bhd (-ve)

SHARES of KESM (Fundamental: 2.5/3, Valuation: 2/3) have risen a cumulative 10.3% since it last triggered our momentum alert on Oct 22, 2015. The stock closed at a one-year high of RM5.48 yesterday.

The company is involved in specialized electronic manufacturing activities, particularly the provision of ‘burn-in’ services to the semiconductor industry. In FYJul2015, KESM derived 78% of its revenue from Malaysia, with the remaining 22% from China.

For 1QFY16, net profit grew an outsized 192.4% to RM8.1 million, on the back of a marginal increase in revenue to RM70.2 million. The increase was attributed to lower employee benefit and other expenses as well as forex gains of RM2.1 million.

Last October, KESM declared a final dividend of 3 sen per share for FY15, which brings total dividends for the financial year to 6 sen — a yield of 1.1% at current price. The final dividend will go ‘ex’ on Jan 15.