Ge-Shen Corporation Bhd (-ve)
Ge-Shen (Fundamental: 2.2/3, Valuation: 1.1/3) is involved in the manufacturing of high precision plastic moulded products and components.
The company’s shares rose 5% yesterday, closing at a historical high of 73.5 sen per share.
Whilst revenue was flattish around RM84-90 million between 2010-2014, pre-tax profit climbed steadily from RM0.8 million to RM5.7 million over the same period. Last year’s profit was boosted by gain on disposal of subsidiaries, totalling RM1.2 million.
On April 17 2015, Ge-Shen issued 30 million redeemable convertible preference shares. Proceeds totalled RM18 million, which will be used to partially fund its purchase of Polyplas Sdn Bhd. The acquisition will cost RM33.76 million, for a 75% stake.
Polyplas is also involved in plastics manufacturing, and is expected to expand Ge-Shen’s product mix and customer base. The stock is currently trading at trailing 12-month P/E of 21.0 times and roughly 1.2 times book value of 61 sen per share.
This article first appeared in The Edge Financial Daily, on April 21, 2015.