Stocks With Momentum: Privasia Technology

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Privasia Technology Bhd
Privasia was picked up by our momentum algorithm for the second time in two months, after the counter rose 14.8% to 15.5 sen over the last two days. Although the stock retraced some 3% to 15 sen yesterday, trading volume doubled from 8 million on Monday to over 20 million shares.

It is unclear what triggered the sharp increase in investor interest, although IT-related companies, especially those offering GST-related services, have seen a pick-up in interest.

Privasia specializes in consultancy, systems integration services, IT outsourcing, E-bidding and E-procurement for the port and logistics industry. The company also provides wireless and satellite-based communication solutions business.

Last month, Privasia announced that it has secured RM31.5 million worth of contracts from the Department of Survey and Kuantan port, putting its order book at RM159.3 mil.

Over the last five years, Privasia has seen its revenue double from RM27.2 million to RM58.5 million, while net profit rose from RM1 million to RM5.4 million.

The company’s latest third quarter results as of Sept 2014 saw the year-to-date group revenue strengthening by 4.5% to RM45.3million, mainly contributed by healthy growth in the Outsourcing and Consulting (OSD) and Satellite based network services (SAT) segments. However, net profit fell by 15% to RM3.3 million caused by lower margins from certain projects.

Privasia has a modestly geared balance sheet, having improved since 2011 to 9.8% in 2013. Borrowings were reduced to RM15.7 million in 2013 from RM24.1 million a year ago. The company paid out a 0.3 sen dividend per share in 2013 which translates into a yield of 1.7%.

The stock currently trades at 0.98 times book, with a trailing 12-month P/E multiple of 17 times. The Edge Research rates this company a 1.4 out of 3 on fundamentals and 1.2 out of 3 in terms of valuation attractiveness.

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This article first appeared in The Edge Financial Daily, on January 14, 2015.