Sern Kou Resources Bhd
Sern Kou’s (Fundamental: 0.85/3.0, Valuation: 1.2/3.0) share price jumped in the past two days to close at a historical high of 46 sen on Monday. 

It could be riding on prevailing positive sentiment for furniture makers. The company derives 62.7% of its sales domestically, with the USA and European countries accounting for 27.2%. 

Revenue has been declining and Sern Kou was loss-making in the past three financial years. It did, however, turn a net profit of RM0.55 million in 1QFYJune2015 on the back of 17.7% turnover increase. It has quite high interest expense relative to operating cashflow, with gearing of 39%.

Last Thursday, Sern Kou proposed to acquire a civil engineering and construction outfit for RM1.2 million, to diversify from its furniture business.

The stock is currently trading at a high trailing 12-month P/E of 23.2 times and 0.83 times book value. No dividends were paid for the past four years.

This article first appeared in The Edge Financial Daily, on January 27, 2015.