SAM ENGINEERING & EQUIPMENT (M) BHD (-ve)
SHARES for SAM (Fundamental: 2.5/3, Valuation: 3/3) jumped as much as 26.6% over the last four trading days on rising volume. The stock closed at its day-high of RM3.76 yesterday, up 7.4%.
SAM provides precision machining, equipment integration and automation solutions, primarily for the aerospace and equipment (HDD and semiconductor) industries.
The company acquired Avitron Pte Ltd, a manufacturer of aircraft components and precision engineering parts, in 2012 for RM146 million. The aerospace division accounted for 63.1% of total sales in 2014 and SAM intends to grow this figure to 80%.
It has a debt-free balance sheet with cash of RM82.8 million or 28.1% of its market capitalisation. ROE ranged between 8.3-11.0% from 2011-2014. Dividends totalled 17.25 sen per share in 2014, giving a net yield of 4.6%.
With only 84.3 million shares outstanding, the stock is fairly illiquid as 74.18% are held by Singapore Aerospace Manufacturing (SAM) Pte Ltd, a leading manufacturer of critical aero-engine components.
This article first appeared in The Edge Financial Daily, on May 12, 2015.