Today, we feature a note on Wong Engineering Corporation Berhad in our FundTech Radar – 10th Apr 2018. The company is principally engaged in the manufacturing of high precision stamped and turned metal parts and components, complex welded frame structure, related modules and systems, as well as trading, marketing and retailing of industrial and consumer products. In FY17, total revenue was made up of 66% local market vs. 34% export market.
· WONG saw its performance improved and turned profitable from FY16 onwards.
· Its FY17 core PATAMI margin surged to 15% (vs. 0.1% in FY16).
· Net cash position of RM6.7m (7 sen per share) as at 31 Jan 2018.
· Dividend yield of 2.1% for FY17 with a 28.5% dividend payout ratio.
· Final dividend of 2 sen and the ex – dividend date is on 16 Apr 2018
· Mr. Ong Yoong Nyock, the major shareholder, owns indirect stake in Tiong Nam Logistics Holding Bhd.
· The rising cost of raw materials and also foreign currency risk on sales and purchases denominated in USD will be the key factors affecting WONG’s performance.
· May assess and expand its presence into medical devices and other industries to diversify revenue streams and customers base.
· The RM87.5m GDV worth of affordable housing apartments is expected to contribute positively to its future earnings
· Currently trading at a 12-month trailing P/E of 9.1x (8.4x if excludes 7 sen net cash per share), a 35.5% discount as compared to its peers, which are trading at a 12M trailing P/E of 14.1x.
The long-term uptrend is still valid
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.
10th Apr 2018
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