Stock With Momentum: Seacera Group Bhd

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This article first appeared in The Edge Financial Daily, on October 20, 2015.

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Seacera Group Bhd (-ve)

SHARES of tile-maker Seacera (Fundamental: 2.3/3, Valuation: 3/3) jumped 10.5 sen or 14.6% to close at 82.5 sen yesterday. The stock triggered our momentum algorithm for the first time. Trading volume of 6.0 million shares was 43 times its past 200-day average. 

Originally involved in the manufacturing and trading of homogenous and ceramic tiles, Seacera diversified into construction and property development in 2014.

For 2Q2015, the company’s revenue dropped by 9.5% y-o-y to RM14.3 million, mainly due to a 45% sales decline in its tiles division to RM8.5 million. This was partially offset by RM5.7 million in new revenue from its construction operations. Meanwhile, profit before tax slumped 67.6% to RM0.59 million. Note that this excludes revaluation gain of RM289.0 million on Seacera’s 215.26 acres of land in Ulu Langat, Selangor. 

Due to the revaluation exercise, the land is now worth RM394.0 million – about 3 times the company’s current market capitalisation.