Stock With Momentum: UMS-Neiken Group

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This article first appeared in The Edge Financial Daily, on January 18, 2016.


UMS-Neiken Group Bhd (-ve)

The rarely traded shares of UMS-Neiken (UMSN) (Fundamental: 2.55/3, Valuation: 1.8/3) rose 13.2% to a three-year high of RM1.29 on rising volume yesterday, despite the absence of new material announcements. Some 3.3 million shares changed hands, compared to its average 200-day volume of 104,551 shares.

UMSN is involved in the design, manufacture and trading of electrical wiring accessories, under own brand manufacturing (OBM) and original equipment manufacturing (OEM). Its OBM products carry the UMS(R) and neiken(TM) labels.

For 9M2015, revenue fell 2.1% to RM45.5 million, due to lower sales in the home appliance and export segment. Net profit, however, grew 54.9% to RM7.0 million, boosted by forex gains of RM2.9 million and better profit margins. Recall also, that there was a RM1.1 million loss on disposal of a subsidiary in 9M2014.

The stock trades at a trailing 12-month P/E of 7.6 times and 1.2 times book.