Stock With Momentum: WTK Holdings

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This article first appeared in The Edge Financial Daily, on December 21, 2015.


WTK Holdings Bhd (-ve)

SARAWAK-based WTK (Fundamental: 1.65/3, Valuation: 1.4/3) triggered our momentum algorithm for the first time on Friday. The stock closed unchanged at RM1.32 with 8.4 million shares changing hands — over 12 times the 200-day average.

WTK is primarily involved in the extraction and sales of timber, manufacturing and sales of plywood, veneer and sawn timber. The timber segment accounted for 80.4% of 9M2015 revenue. WTK also has interests in oil palm plantation, oil & gas and the manufacturing and trading of foil and tape products.

For 3Q2015, revenue increased 23% y-y to RM191.3 million while net profit surged 78.1% to RM21.2 million, primarily due to its timber operations, which benefited from higher sales volume of plywood products and the strong US dollar. Note that WTK’s timber products are exported to countries like India, Vietnam, Singapore and Japan.

The stock trades at a trailing P/E of 17.3 times and an undemanding 0.5 times book.