Stock With Momentum: Sern Kou Resources

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This article first appeared in The Edge Financial Daily, on January 28, 2016.


Sern Kou Resources Bhd (+ve)

SHARES in furniture maker Sern Kou (Fundamental: 0.9/3.0, Valuation: 1/3.0) jumped 3 sen or 4.65% to close at 67.5 sen yesterday.

It saw 805,800 shares changing hands despite the lack of any new announcement. This is compared with its average 200-day volume of 135,681 shares. Its market capitalisation stood at RM80.4 million.

Net profit for its first financial quarter ended Sept 30, 2015 (1QFY16) nearly tripled to RM1.53 million, despite an 11.8% decline in revenue to RM24.11 million from RM27.33 million in 1QFY15.

In the manufacturing sector, revenue rose 8% to RM11.6 million and pre-tax profit jumped 400%. The significant increase in profit is due to a stronger US dollar against the ringgit.

Sern Kou derived 27.6% of its revenue from export markets including the United States, Europe and Africa.

The stock is trading at a trailing 12-month P/E of 24.7 times and 1.2 times the book value.