CSC Steel, Ewein, Xingquan, Poh Huat, Cypark and Nexgram [The Edge -31 Dec 15]

KUALA LUMPUR (Dec 31): Based on corporate announcements and news flow today, companies that may be in focus next Monday (Jan 4, 2016) could include: CSC Steel, Ewein, Xingquan ( Valuation: 3.00, Fundamental: 1.95), Poh Huat, Cypark and Nexgram.

Downstream steel producer CSC Steel Holdings Bhd ( Valuation: 1.80, Fundamental: 1.20) (fundamental: 1.2; valuation: 1.8) is acquiring two pieces of leasehold land, together with factory buildings, at Seberang Perai, Penang, for RM41 million from Tatt Giap Group Bhd ( Valuation: 0.90, Fundamental: 0.00).

In a filing with Bursa Malaysia, CSC Steel said its wholly-owned subsidiary, CSC Steel Sdn Bhd, had entered into a sale and purchase agreement (SPA) with Tatt Giap and its 51%-owned subsidiary Tatt Giap Steel Centre Sdn Bhd, for the said acquisition.

The said properties are currently rented by Nippon Egalv Steel Sdn Bhd, and MSM Prai Bhd — a wholly-owned unit ofMSM Malaysia Holdings Bhd ( Valuation: 2.40, Fundamental: 2.60).

CSC Steel said the acquisition is beneficial to it, as these properties are rented to reputable tenants, currently generating a rental income of not less than RM3.18 million per annum.

CSC Steel said it expects the acquisition to complete by May 2016.

On a separate filing, CSC Steel also announced that its managing director, Chen Chung-Te, is resigning with effect from Jan 1, 2016, due to the completion of his secondment, and will head back to parent company China Steel Corp, Taiwan.

As a result, Huang Chun-Hui @ Hwang Dring Fei has been appointed as the new managing director.

Huang, 63, joined China Steel since 1979 and his last position in China Steel was executive vice president of a Vietnam subsidiary, China Steel Sumikin Vietnam Joint Stock Company.

Precision sheet metal manufacturer cum property developer Ewein Bhd ( Valuation: 1.10, Fundamental: 1.70)(fundamental: 1.7; valuation: 1.1) is acquiring a 50% stake in construction outfit UD Piles Sdn Bhd for RM2.88 million cash, as part of the property developer’s strategy to diversify its business.

In a filing with Bursa Malaysia today, Ewein said it has signed a share sale agreement (SSA) with Messrs 555 Capital Sdn Bhd for the proposed acquisition, which will be funded entirely through internal funds.

Ewein said it expects the acquisition to be completed within three months from the date of the SSA.

In a separate statement, Ewein revealed that UD Piles is a general contractor and sub-contractor in the construction industry, with an authorised share capital of RM5 million; while Messrs 555 Capital is an investment holding company, with an authorised share capital of RM50 million.

China-based shoe apparels manufacturer Xingquan International Sports Holdings Ltd (Xingquan) (fundamental: 1.95; valuation: 3.0) plans to spend 150 million yuan (RM99.22 million) to purchase 80 to 100 knitting machines, as part of its upstream expansion plan.

Xingquan’s chairman and managing director Datuk Wu Qing Quan said the company planned to buy advanced equipment to venture into the production of knit fabric, which could be used in producing shoes and the inner lining of clothing.

“For the first phase, we will buy 80 to 100 knitting machines, which would cost about 150 million yuan and supported by 200 million yuan supporting cash flow,” Wu said, after the company’s annual general meeting (AGM) here today.

He is optimistic that the knitting machines will help to increase the revenue of the company. It is expecting the knitting machine to increase the product range offered by the company, and contribute about 100 million yuan annually to the firm.

The purchase of the knitting machines are expected to be completed by the first half of 2016 (1H16), which would contribute to its financial year ending June 30, 2016.

Wood-based furniture maker Poh Huat Resources Holdings Bhd ( Valuation: 2.10, Fundamental: 2.10) (fundamental: 2.1; valuation: 2.1) saw its net profit rise 43.46% to RM15.85 million or 7.43 sen per share for the fourth financial quarter ended Oct 31, 2015 (4QFY15), from RM11.05 million or 5.18 sen per share a year ago, due to higher demand for furniture in the United States and Canada.

The group also recommended a final dividend of two sen per share for shareholders’ approval at the forthcoming annual general meeting.

In its quarterly report to Bursa Malaysia today, Poh Huat said the higher gross margin was mainly attributable to its higher level of productions; improvements in margin of the products shipped, particularly those from Malaysian factories; and higher proceeds realised from the stronger US dollar-denominated sales during the quarter under review.

For 4QFY15, Poh Huat’s revenue rose 29.66% to RM140.18 million, from RM108.12 million in 4QFY14.

For the full FY15, the group’s net profit rose 64.62% to RM39.19 million, from RM23.80 million in FY14; while revenue increased by 20.35% to RM453.93 million, from RM377.17 million in FY14.

Moving forward, given the good fundamentals and strength in the North America markets, Poh Huat is optimistic that demand for its products will be sustained for the next financial year.

The group said it is however mindful that the global environment continues to be volatile, due to the prolonged economic downturn, low commodity prices and recent escalation of social and security issues in Europe.

Integrated environmental engineering and technology provider Cypark Resources Bhd ( Valuation: 1.80, Fundamental: 1.15) (fundamental: 1.15; valuation: 1.2) posted a 27.29% year-on-year growth in net profit for its fourth financial quarter ended Oct 31, 2015 (4QFY15) to RM8.17 million or 3.89 sen per share, from RM6.42 million or 3.48 sen per share a year ago.

Revenue for 4QFY15 rose 12.66% to RM55.74 million, from RM49.48 million, indicating a margin expansion.

For the full FY15, Cypark’s net profit grew by 8.89% to RM43.49 million or 20.73 sen a share, compared with RM39.94 million or 21.7 sen a share in FY14.

Revenue grew by a marginal 5.47% to RM251.85 million, from RM238.8 million.

“Cypark is determined to be one of the leaders in this transformation of the energy industry. Based on renewable energy (RE) industry outlook — locally and globally — Cypark is in an excellent position to pursue future growth, by continuing to innovate and lead the market; centred on the group’s two core expertise — integrated RE generation and green engineering solutions,” the group said.

Cypark said it expects its business and performance to be robust and strong in FY16.

Telecommunication software advisory service provider cum property developer Nexgram Holdings Bhd ( Valuation: 1.10, Fundamental: 1.15) (fundamental: 1.15; valuation: 1.1) announced a net profit of RM3.9 million for its second quarter ended Oct 31, 2015 (2QFY16) against a net loss of RM7,000 a year earlier, on higher sales of video surveillance equipment.

Revenue rose to RM31.01 million, from RM24.98 million, Nexgram’s filing with Bursa Malaysia showed.

For 1HFY16, Nexgram said net profit was higher at RM3.39 million, versus RM1.49 million a year earlier. Revenue rose to RM57.78 million, from RM49.2 million.

For the rest of FY16, Nexgram said it was cautiously optimistic that it would be able to achieve satisfactory performance.