SLP Resources Bhd (-ve)
SLP (Fundamental: 2.8/3, Valuation: 1.1/3) was first picked by our momentum algorithm on March 13 at 76.5 sen. Since then, the stock has risen by an outsized 88.2% to close at RM1.44 yesterday.
This could be attributed, in part, to the persistent low oil prices. Prices of resin, the main raw material used in the production of plastic, are closely correlated to oil prices.
SLP is a niche manufacturer of polybags and polyfilms. Export, mainly to Japan, accounts for about 40-50% of its sales.
For 1Q2015, net profits surged 75.9% y-o-y to RM4.5 million, on lower raw material costs and better sales mix. However, revenue fell 6.8% to RM41.4 million, largely due to a 32.8% decline in domestic sales to RM17.8 million.
The stock is trading at a high trailing 12-month P/E of 22.5 times and 3.2 times book. The company paid dividends of 2 sen per share from 2010-2014, giving a net yield of 1.4%.
This article first appeared in The Edge Financial Daily, on June 19, 2015.