Supercomnet Technologies Bhd (+ve)

DESPITE reporting a loss for 4Q2014 on February 27, the share price of SCOMNET (Fundamental: 2.35/3, Valuation: 1.2/3) has continued to rise, gaining 15.4% since then. Volume traded surged over 16-fold to 34.7 million shares last Friday. Based in Sungai Petani, Kedah, SCOMNET manufactures wires and cables for the automotive industry. It has a debt-free balance sheet with cash of RM9.1 million or 26.7% of its market capitalisation.

For 4Q2014, the company fell into the red with net loss of RM409,000, mainly due to the provision for slow-moving inventories. Nevertheless, for the full year, net profit increased 19.9% to RM776,000 on the back of 28.2% jump in sales to RM33.7 million. The bulk of earnings came from 20%-owned associate, Supercomal Medical Products, which manufactures cables for medical devices.

The stock is trading at a trailing 12-month P/E of 21.2 times and 0.88 times book. No dividend was paid for FY2012-2014.

This article first appeared in The Edge Financial Daily, on March 16, 2015.