CHUAN (7016) - This quiet company is really worth a mention afterall
Since February is a financial reporting month, the coming few days will be very interesting, with much company presenting their quarterly result. While much of my previous recommendation had to do with potential corporate exercises, change in company direction, emergence of new shareholder, I am thinking that it would be good mix "dishes" to bring in some company that are growing and doing well financially and fundamentally but still undervalue according to their share prices.
Typically, the company that I am going to introduce later will not be going to see much interesting moves in the corporate direction, except for normal day to day business. Hence, this kind of company will be suitable for investor with strong holding power that will know how to appreciate the company fundamental and wait upon their business to reward them at the right time.
Now this company is quite similar to Arank, which I had introduced to you last year when it is still RM 0.67. At that point of time, I am able to see 2 thing that can benefit Arank, which is the improvement of margin and the improving demand of it's products.
Since Malaysia already implemented measure to protect the local steel industry, I will continue to stand believe that local steel player will continue to benefit from this. In additional, the start work of MRT 2, LRT extension and revival of housing project from affordable housing will also contribute to the resumption of demand in steel products.
For this, I would like to recommend this undervalue yet potential company again - Chuan Huat Resources Berhad (Chuan - 7016)
Technically speaking, this company had dwindle down a lot from it's previous glorious peak. Now, the share price is looked prepared to make a come back, supported with improving fundamental and financial.
Actually, I had made a previous recommendation on Chuan when it is still laying lowly at RM 0.48 last year. However, due to the volatility surrounding the market from crude oil to the US presidential election, this counter had been hidden into the forgotten woods again.
Since this is a fundamentally doing well company with improving earning, especially improving profit margin from a better selling price in steel product, I think it is very fair for me to give this company a small mention, especially for the coming quarter report for the 4Q FYE 2016 that will be going to be around this few days.
The 3 rolling quarters had saw EPS at 4.78 cents now. Going to do a small projection of the company performing another 1.5 cents, which can make an estimation of total FYE 2016 EPS to 6.3 cents, relating to a valuation of RM 0.63 at PER x 10.
Since this company had a huge base of NTA at RM 1.55 per share, this will be a good cushion for you to hold this company longer.
I believe that the commencement of work from MRT 2 and LRT extension as well as affordable housing will contribute greatly to Chuan earning, especially under the circumstances that the local steel industry is protected by MITI from external cheap imports that damages the profit margin.
Since the coming quarter report is anticipated with a good result, this will probably worth your pick if you believe that Chuan is going to do better in the future.
CHUAN (7016) - This quiet company is really worth a mention afterall
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