Mikro Msc Bhd (-ve)
ELECTRICAL distribution equipment maker Mikro (fundamental: 3/3; valuation: 2.1/3) triggered our momentum algorithm yesterday after 871,800 shares changed hands. Listed on the ACE Market, its shares have risen 87% to 54.5 sen from 29.1 sen a year ago.
Established in 1997, Mikro specialises in the manufacturing of protective relays, which are used in a building’s integrated electrical system to monitor and prevent damage to electrical equipment. Thanks to its strong in-house R&D team, its products are able to match major international brands in quality at competitive pricing.
Mikro’s products have since gained market acceptance in both domestic and overseas markets, with its revenue almost doubling to RM38.9 million in FY2015 from RM20.2 million in FY2010. While maintaining a net cash position in this five-year period, its ROE improved by an 8.4 percentage points to 24.1% on higher margin and asset turnover.
As of FY15, Mikro derived 63% of its sales locally with the rest coming from Vietnam (15%), India (4%), Iran (3%) and other countries. However, there is some client concentration risk, as its top four customers accounted for about half its revenue.
For its second quarter ended Dec 31, 2015 (2QFY16), revenue rose 48% year-on-year to RM13.7 million while net profit surged 72% to RM3.1 million on better domestic and overseas sales, coupled with foreign exchange gains arising from a stronger US dollar.
During the quarter, Mikro completed its RM11.7 million acquisition of a larger factory in Klang to consolidate its entire operations under one roof. The company also raised RM8.3 million via a private placement for renovation work and the purchase of testing machineries for the new factory, besides working capital.
For a growth company, the stock trades at a slight premium valuation, at a trailing 12-month P/E of 16.5 times and 3.3 times book value. Dividends totalled 1 sen per share for FY15, giving the stock a dividend yield of 1.8%.
MIKROMB (0112) - Stock With Momentum: Mikro Msc
http://www.theedgemarkets.com/my/article/stock-momentum-mikro-msc-0
