Stock With Momentum: Lee Swee Kiat Group

This article first appeared in The Edge Financial Daily, on May 2, 2018.
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Lee Swee Kiat Group Bhd (-ve)
SHARES in bedding manufacturer Lee Swee Kiat Group Bhd (fundamental: 2.1/3, valuation: 1.7/3) has triggered our proprietary momentum algorithm for the eighth time since January this year.

The stock closed five sen or 6.99% higher at 76.5 sen with a volume of 5.25 million shares, exceeding its 200-day average volume of 657,606 shares.

For its fourth quarter (4Q) ended Dec 31, 2017, LSK’s net profit increased 41.7% to RM3.02 million from RM2.13 million the previous year while its revenue rose 39.56% to RM22.83 million from RM16.36 million.

The increase in revenue is due to robust sales from both foreign and domestic markets — export demand has shown strong recovery in the 3Q and 4Q against weak sales in 1Q while domestic sales picked up in line with LSK promotional activities, which contributed to the 16.7% increase in total revenue in 2017.

At its closing price of 76.5 sen, Lee Swee Kiat was trading at 2.73 times its book value, with a market capitalisation of RM125.61 million.