Stocks to Watch: Daya Materials, Perdana Petroleum, Sapura Energy, FGV, MBM Resources

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KUALA LUMPUR (Nov 22): Profit-taking activities are noticeable ahead of the weekend. Both the FBM KLCI and FBM Small Cap Index were drifting lower, dictated by a lack of buying impetus in the market and uncertainties over the trade war between China and the US continuing to dampen sentiment.

The rotational play on the laggards in the oil and gas (O&G) sector has made Daya Materials Bhd the second-most traded counter on Bursa Malaysia today after KNM Group Bhd.

The financially-ailing company saw its trading volume swell to a three-month peak of 48.7 million shares at noontime — the highest since Aug 20.

The penny stock is trading up 0.5 sen to 1 sen, giving it a market capitalisation of RM20 million.

The latest news on Daya Materials, which has accumulated losses of RM435.7 million, is its quarterly financial results.

Daya Materials posted a net profit of RM3.57 million for the third quarter ended Sept 30, 2019 (3QFY19) compared with a net loss of RM17.1 million a year ago.

Revenue, however, came in 21% lower at RM49.92 million against RM62.1 million in the previous corresponding quarter.

The company, which has defaulted on loans from several banks, was still in the red in the nine-month period ended Sept 30, 2019 (9MFY19), but net loss narrowed to RM5.54 million versus RM31.42 million a year ago.

The Practice Note 17 firm attributed the improved quarterly performance to a reversal of "liquidated ascertained damages of a RM10.1 million construction contract"; meanwhile, there was an allowance for foreseeable losses of RM14.5 million "due to potential recession of a construction contract", according to a bourse filing.

Other O&G counters that are actively traded today include Perdana Petroleum Bhd, which also announced improved quarterly results, Sapura Energy Bhd and Alam Maritim Bhd.

Perdana Petroleum is the fourth most active counter in the morning trading session with 45.06 million shares changing hands. Its share price rose one sen to 46.5 sen.

The company's net profit more than doubled to RM18.08 million in 3QFY19 versus RM6.53 million a year ago. Revenue grew 42.8% to RM87.4 million in 3QFY19 from RM61.2 million previously.

For the 9MFY19, Perdana Petroleum's net loss narrowed to RM20.29 million compared with RM50.02 million the year before.

The increase in revenue achieved in 3QFY19 is mainly attributable to higher vessel utilisation at 91% as compared to 84% in 3QFY18, the company said in a filing to Bursa.

"In addition, the profit before taxation in 3QFY19 has also taken into account a one-off gain on bargain purchase of RM10.6 million arising from the acquisition of a new subsidiary in July 2019.

"In contrast, an impairment loss on property plant and equipment of RM5.8 million plus a net realised/unrealised foreign exchange gain of RM14.2 million were accounted for in the previous corresponding quarter," the company explained.

Sapura Energy is the eighth counter on the volume list with about 35.39 million shares traded as at noon break. Though the O&G big boy went up 0.5 sen to 29 sen today, it has yet to see the strong rally that its peers have over the past few months.

The share price rally on FGV Holdings Bhd seems to be gathering steam; it climbed further to RM1.31 today, with 21.6 million shares changing hands.

The plantation stock has more than doubled from its 52-week low of 63 sen in January. FGV is due to release its third quarter financial results by month-end.

MBM Resources Bhd shares soared to a high of RM4.05 after the stock "gap up" at the ring of the opening bell. It opened at RM3.93 against yesterday's closing of RM3.70. Nonetheless, at the lunch break, the auto stock retreated to RM3.81, which is still up 11 sen or 2.97%.

MBM's third quarter's earnings have beaten the market consensus. Analysts expect the latest numbers to add fuel to the share price rally that started in late December last year, leaping from the low of RM1.87.

(For MBM's 3Q results, read Higher Perodua car sales drive up MBM 3Q net profit)

Some research houses such as Hong Leong Investment Bank (HLIB) and RHB Equity Research have reiterated their buy recommendation on MBM with higher target price.

HLIB raised its target price to RM5.50 from RM4.80, while RHB raised it to RM4.95 from RM4.85.