Good morning.

Today, we feature a note on Sern Kou Resources Berhad in our FundTech Radar – 27th Mar 2018. The company is principally engaged in manufacturing of wooden furniture; manufacturing and processing of all kinds of timber, wood and related products; logging and processing of rubberwood and timber; and manufacturing of plywood and related products. In FY17, total revenue was made up of 34% export market.

Fundamental Stance

·         strong 3-year (FYE15-17) revenue and PATAMI CAGR of 12.8% and 158.3% respectively

·         FY17 PATAMI margin dropped slightly to 1.1% (vs. 1.3% in FY16)

·         0.55x net gearing ratio

·         foreign currency risk on sales denominated in USD as well as shortage of workforce will continue to be the key factor affecting SERNKOU’s performance

·         Currently trading at a 12-month trailing P/E of 22.9x, a 106.3% premium compared to its peers, which are trading at a 12M trailing P/E of 11.1x

Technical Front

The long-term upward channel is no longer valid

Resistances: 0.70/0.855/1.00

Supports: 0.50/0.35/0.27

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.

27th Mar 2018

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