Three-A Resources Bhd (-ve)

THREE-A Resources (Fundamental: 2.05/3, Valuation: 1.4/3) saw a surge in trading activity yesterday with 3.6 million shares changing hands, more than 13.8 times its average daily trading volume. The stock has gained 9.1% to RM1.01 month-to-date.

For 1Q15, revenue declined 2.7% y-o-y to RM74.6 million while net profit fell 2.4% to RM3.5 million, mainly due to lower sales. Loss incurred by Three-A (Qinhuangdao) Food Industries Co Ltd, a 50:49 joint venture in China with Wilmar International Ltd, widened to RM1.6 million, from RM1.3 million in 1Q14.

Three-A Resources manufactures food and beverage ingredients such as caramel colour, glucose syrup, maltodextrin, and soya protein sauce. It has a net cash of RM5.1 million, down from a net debt of RM54.2 million in 2012.

The stock is trading at a trailing 12-month P/E of 21.5 times and 1.64 times book. Dividends totalled 1.4 sen in 2014, giving a net yield of 1.4%. 

This article first appeared in The Edge Financial Daily, on June 10, 2015.