Key Asic Bhd (-ve)

KEY Asic (Fundamental: 1.55/3, Valuation: 0/3) was slapped with an unusual market activity (UMA) query yesterday, after its share price rose a whopping 106.3% to 16.5 sen on Monday. 

The usually thinly traded stock climbed another 24.2% to close at an all-time high of 20.5 sen yesterday. A total of 10.0 million shares were traded, 88.3 times its average daily trading volume of 113,267.

The semiconductor design company had not responded to Bursa’s UMA query at the time of writing.

Key Asic, an MSC-status company, provides turnkey application — specific integrated circuit (ASIC) design services, data management, telecommunications, and other engineering services. It was granted an extension of its pioneer status, and will be tax exempt until 13th April 2016. There was no significant development recently, save for its 2Q15 earnings announcement on August 20. 

To recap, the company has been making losses from 2010-2014. For 1H2015, net losses narrowed to RM8.1 million, from RM9.4 million in 1H2014, mainly due to a 30.8% increase in revenue to RM9.2 million from both its recurring and non-recurring services. 

It is planning to turn things around by launching two new products, K-Drive and K-Card by end-September 2015. K-Drive is essentially a portable Wi-Fi personal backup device while K-Card is an in-house brand that turns non Wi-Fi devices into Wi-Fi enabled devices. 

Key Asic will fund the research and development of both new products through private placement of up to 81.2 million new shares. It plans to raise a maximum of RM6.1 million from the entire exercise, 88.4% of which will be used for research and development of its new products, 6.7% for working capital and the rest for related private placement expenses.

Historically, Key Asic has not declared any dividends. The stock is trading at 5.3 times book. 

This article first appeared in digitaledge Daily, on September 9, 2015.