Stock With Momentum: Pelikan Int. Corporation

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This article first appeared in The Edge Financial Daily, on December 28, 2015.


Pelikan Int. Corporation bhd (-ve)

LOSS-MAKING Pelikan (Fundamental: 0.35/3, Valuation: 0.3/3) triggered our momentum algorithm last Wednesday, closing 9.1% higher to RM1.08.  

Pelikan is primarily engaged in manufacturing and distributing of stationeries. Exports, mainly to Europe and Americas, accounted for all of its 2014 revenue. However, the weakening of ringgit has not been boding well with the company as majority of its borrowings are denominated in foreign currencies, primarily in USD and Euro.

This has resulted in an uninspiring 3Q2015 results. For 3Q2015, Pelikan recorded a net loss of RM12.3 million as compared to a net profit of RM3.5 million a year ago, mainly due to foreign exchange losses amounting to RM29.2 million. 

In April, Pelikan completed a RM1.2 billion corporate exercise to streamline its key stationery businesses into its Germany-listed subsidiary Pelikan AG. Consequently, Pelikan now collectively own 98.6% of Pelikan AG and will increase the public float of Pelikan AG going forward.

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