Stock With Momentum: Mercury Industries

-A +A

This article first appeared in The Edge Financial Daily, on January 13, 2016.


Mercury Industries Bhd (-ve)

THINLY-TRADED shares of car paint maker Mercury (Fundamental: 1.4/3, Valuation: 3/3) gained 2.2% in active trade to close at RM1.37 yesterday.

In 2014, revenue dipped 2% y-o-y to RM46.5 million while net profit plunged 26% to RM4.8 million, impacted by weaker domestic sales, higher operating expenses, and impairment losses on inventories and receivables.

The company in August 2015 completed the acquisition of a 70% stake in construction outfit Paramount Bounty Sdn Bhd for RM42 million, marking its entry into the construction industry. The acquisition comes with a profit guarantee of RM6.6 million per annum for 2015-2017.

For 3Q2015, revenue doubled from a year ago to RM23.2 million while net profit surged 93% to RM2.6 million, mainly due to the maiden contribution from the construction division.

The stock trades at a trailing P/E of 8.7 times. Dividends ranged from 8 sen to 10 sen in the past three years, giving yield of 6-7.5%.