UMSNGB had benefited from forex gain in the past 3 quarters. These exceptional gain amount to RM2.86 million helped to boost the company's earnings but they may not recur in the future. If the exceptional gains noted above are excluded, its last 3 quarters' EPS would drop from 8.8sen to 5.24sen.
I saw your posting here and checked the Annual Report @ 31 Dec 14. I missed seeing Famous shareholder Coldeye “Fong siling” as a shareholder according to their annual report. Is it under one of the companies mentioned?
I looked at this stock because it was picked out under Metastock's Oversold Momentum Filter which I use to see what stocks had been sold off at a very high intensity. Very often we can find some which were unduly sold due to unfounded rumours etc. I also checked the financials which is OK.
In UMS case, the last quarterly results must have affected the company and recent Ringgit appreciation also accelerated the sell down.
For a company like UMS, they are providing what I call, a "commodity"product as there is really no "rocket science"involved. In such instances, the only way for the company to grow is to have a really good marketing team and knowledge of how to differentiate their products. Look at tooth brush manufacturers and you will know what I mean.
The amount of cash in their coffers is good and the company should consider either investing it for future income growth (which is difficult as it is in a matured industry ) or consider to provide higher dividends. The latter will give generate some interest in the company. They can also consider giving Bonus issue as there is RM38.92 Million Retained Profits in their Balance Sheet.
With regards to TPPA, Malaysia will face competitors like Vietnam whose productivity is growing as the people there are very hard working.
I conclude that while the balance sheet of this company is good, growth prospects will not be great given that they do not have any significant competitive advantage in a "commodity"product.
The effects of the USD receipts which may be smaller for the quarter ended 31 Mar 2016 may affect its profits.
Nevertheless, at a current PE of around 8 (using price of 0.91 divided by EPS of 0.12 per the last quarter results ), it is not expensive. Question is what are the growth prospects going forward to attract Investors? They are in a market where there are a lot of Competitors
Technically the share seems to not have found a support level yet based on the weekly chart. It hit a double top end Jan and Feb and started dropping since the results were announced on 24/2. Recently tried to recover when it dropped to 0.89 but this was short lived. On 1/4 there were no trades.
The free float of this company is less than 20% which may have caused the illiquid status now.
The 0.89 level may be the tested again and if that does not hold 0.845 beckons.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
crystal168
1,663 posts
Posted by crystal168 > 2015-10-26 10:00 | Report Abuse
sit tight tight !!!!