Stock With Momentum: LUXCHEM

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This article first appeared in The Edge Financial Daily, on October 9, 2015.

LUXCHEM Corporation Bhd (-ve)

LUXCHEM (Fundamental: 1.7/3, Valuation: 1.7/3) closed 3.3% higher at an all-time RM1.59 yesterday. The stock has risen by 38.4% since it was first picked by our momentum algorithm on April 8.

There appears no significant development recently save for earnings announcement on July 30. For 1H2015, sales increased 12.3% y-o-y to RM333.6 million while net profit rose 17.1% to RM11.4 million. Excluding employee share option expense of RM8.7 million, normalised net profit more than doubled to RM20.1 million, due to higher contribution from both trading and manufacturing segments. 

Luxchem mainly trades and distributes industrial chemicals and materials, as well as manufactures and trades unsaturated polyester resin and related products. For 2014, the trading segment accounted for 83.6% of sales with the balance 16.4% coming from the manufacturing segment. The trading division distributes products such as chemicals and raw materials for the production of friction brake parts, ceramic, latex and PVC.