This article first appeared in The Edge Financial Daily, on October 15, 2015.
SOLID AUTOMOTIVE BHD (+ve)
SHARES of Solid Automotive (Fundamental: 1.95/3; Valuation: 0.3/3) continued to rise despite reporting weaker earnings results last month. The stock has since risen by 9.1% to RM1.80 on Tuesday.
For 1QFYApr2016, sales fell 10.0% y-o-y to RM28.3 million while net profit slumped 34.7% to RM1.5 million, due mainly to higher administrative costs. It has a net cash of RM2.2 million or 1.4 sen per share.
Johor-based Solid mainly trades and distributes automotive electrical parts and components. Export, mainly to the Middle East and Africa, accounted for 40% of sales in FY2015, while the remaining 60% came from Malaysia and Singapore. Its clientele includes Bosch and Mercedes Benz.
On July 30, Solid proposed a 1-for-2 rights issue of warrants at an issue price of 20 sen per warrant. The proceeds, of up to RM16.5 million, are primarily for working capital purposes.
The stock trades at a high trailing P/E of 33.8 times and 2.5 times book.