Stock With Momentum: KESM Industries

This article first appeared in The Edge Financial Daily, on January 13, 2020.
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KESM Industries Bhd (-ve)
TRADING of shares in specialised electronic manufacturer KESM Industries Bhd (fundamental: 2.35/3, valuation: 0.8/3) triggered our momentum algorithm last Friday for the second time in the past year, with the previous one on Nov 21, 2019.

A total of 158,600 shares were crossed, compared with the counter’s 200-day average of 36,381 shares, before it closed 48 sen or 5.13% higher at RM9.84, with a market capitalisation of RM432.26 million. KESM executive chairman and chief executive officer Sam Lim said the worst is over for the group — after its net profit plunged 84% to RM6.28 million for the previous financial year ended July 31, 2019 (FY19) — as he believes the automotive semiconductor industry has bottomed out. Lim expects earnings for FY20 to see a “more progressive growth”.

The group showed a major improvement in its financial performance when net profit for the first quarter of FY20 soared 71.45% to RM4.53 million or 10.53 sen a share, from RM2.64 million or 6.14 sen a share a year earlier, thanks to lower expenses and other higher incomes.