Stock With Momentum: LB Aluminium

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This article first appeared in The Edge Financial Daily, on March 29, 2016.


LB Aluminium Bhd (+ve)

SHARES of LB Aluminium (fundamental:0.85/3, valuation: 2/3) triggered our momentum algorithm for the first time yesterday after 1.6 million shares were transacted. The stock rose 3.5 sen or 7% to close at 53.5 sen.  

For the third financial quarter ended Jan 31, 2016, net profit more than doubled to RM5.2 million from RM2.0 million a year ago, mainly due to better profit margins arising from lower aluminium prices. Revenue, however, was down 1.8% year-on-year to RM114.5 million on lower business volume.

Based in Beranang, Selangor, LB Aluminium is primarily engaged in the manufacturing of wide range of aluminium extrusions widely used for finished products. During FY2015, the company expanded its extrusion capacity by adding two new extrusion lines.

The stock currently trades at a trailing 12-month P/E of 13.4 times and 0.46 times book value. Dividend was consistently 2 sen per share for the past three years, giving a dividend yield of 4.0%.