Stock With Momentum: Techfast Holdings

This article first appeared in The Edge Financial Daily, on July 11, 2017.
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Techfast Holdings Bhd (-ve)
SHARES in Techfast Holdings Bhd (fundamental: 2.55/3, valuation: 1.1/3) triggered our momentum algorithm yesterday for the third time this year.

The counter closed up three sen or 3.77% at 82.5 sen, with 8.53 million shares done, exceeding its 200-day average volume of 2.1 million shares. Over the past 12 months, Techfast’s stock price surged 342.11% to reach an intraday high of 84 sen from 19 sen.

It plans to acquire the remaining 10% stakes in two subsidiaries, namely Cape Technology Sdn Bhd and Oriem Technology Sdn Bhd, for RM3.2 million. The self-clinching fasteners manufacturer said the acquisitions are timely, as the companies’ businesses are projected to grow and expand in the near future. The acquisitions are expected to contribute positively to the group’s earnings and earnings per share (EPS) for the financial year ending Dec 31, 2017 (FY17), as it would allow Techfast to fully consolidate the financial results of the companies.

Techfast said based on the audited financial statements of FY16 and assuming the acquisitions were completed, the profit attributable to the owners of the company would increase by RM337,277. The company said that it would translate into an increase in earnings per share (EPS) to about 2.1 sen, from 1.9 sen, which represents an increase in EPS of about 0.2 sen.

At the current share price, Techfast is trading at 5.5 times its book value.