Stock With Momentum: MLABS Systems

This article first appeared in The Edge Financial Daily, on July 12, 2017.
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MLABS Systems Bhd (+ve)
SHARES in MLABS Systems Bhd (fundamental: 1.85/3, valuation: 0/3) triggered our momentum algorithm for the third time this month. The counter gained 3.5 sen or 13.72% at 29 sen, with some 42.96 million shares changing hands, versus its 200-day average trading volume of 822,581 shares.

There has been a surge of interest in the software development firm’s shares over the past few days. The stock touched a seven-year high of 30.5 sen yesterday, after a relatively uneventful first half of 2017, trapped in the range of six sen to 14.5 sen. It is unclear what is driving the optimism in the company’s shares as it has not made any material announcement to the stock exchange since announcing its fourth-quarter results in May.

For the fourth quarter ended March 31, 2017, MLABS saw a net loss of RM191,000 compared to its net profit of RM279,000 a year earlier. Its annual net loss shrank 50% to RM217,000 in the financial year ended March 31, 2017, from RM438,000.

Meanwhile, one of its directors, Prof Dr Sureswaran Ramadass, yesterday disposed of a total of 180,000 shares through three blocks, valued at a total of RM43,050. He sold 80,000 shares at 23.5 sen a share, 50,000 shares at 24 sen per share and another 50,000 shares at 24.5 sen per share. Following the disposal, Sureswaran’s holdings in the company stand at 335,132 shares or 0.18%.

MLABS is currently trading at 9.65 times its net book value.