Good morning.
Today, we feature a note on Unimech Group Berhad in our FundTech Radar – 19th June 2018. The company is a leading manufacturer of valves and pumps. Unimech produces valves and pumps in 6 manufacturing facilities in Penang, Kedah, and Perak. In China, it has 3 plants in Tianjin, Dongguan, and Huangshan.
Fundamental Stance
· A flat 3-year (FYE15-17) revenue CAGR of 1.2% but its core profit after tax & minority interest (PATAMI) staged a rebound in FY17 following the 4 consecutive FYs of declines.
· Its business operates on a benign core PATAMI margin of about 4.3% on average.
· Net gearing ratio remains at about 0.34x as at 1Q18.
· FY17 dividend yield remains at 3% while div. payout falls from 35.3% in FY17 from 55.3% in FY16.
· 30% div. payout policy.
· Currently negotiating with customers from the O&G industries to purchase its valve products, which would be used for onshore and offshore O&G extraction projects, as well as refining operations in Asia.
· The increased in palm oil production in Indonesia will impact positively on the sales of the valves.
· 26th June 2018 is the ex-date of the first and final dividend of 3sen per share.
· Currently trading at 9.4x 12-month trailing P/E, a 29.7% discount to its 3-year historical average P/E of 13.3x.
Technical Front
Trend is down.
Resistances: 1.15/1.23/1.29
Supports: 0.97/0.915/0.85
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
19th June 2018
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