Good morning.
Today, we feature a note on OPCOM Holdings Berhad in our FundTech Radar – 14th August 2018. It is primarily engaged in the manufacturing of fiber optic cables and cable related products. OPCOM operates wholly in Malaysia.
Fundamental Stance
· A benign 3-year (FYE15-17) revenue and core PATAMI CAGR of 9.4% and 14.8% respectively.
· Its FY18 core PATAMI margin dropped to 6.4% (vs. 7.5% in FY17).
· Net cash position of RM18.3m (11sen per share) as at 31 Mar 18.
· Consistent dividend payment since FY05. Div. yield of 2% with div. payout of 48.3%.
· Dato' Seri Mukhriz Mahathir, who is a major shareholder of OPCOM, has reduced his stake in OPCOM by about 1.3% year-to-date.
· Profit margin continues to be under pressure from increasing raw materials cost, challenging business environment and limitations in passing increased cost to its customers in the short term.
· The recent RM11.2m worth of contract awarded by TM is expected to contribute positively.
· OPCOM is expecting an increase in demand for fiber optic cables domestically as a result of the Government's call for doubling of broadband speed to Malaysian consumers.
· Currently trading at 47x 12-month trailing P/E (41.6x if excludes 11sen net cash per share), a 49.1% discount compared to its peers.
Technical Front
Current steep uptrend is still intact.
Resistances: 1.00/1.17/1.22
Supports: 0.85/0.80/0.74
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.
14th Aug 2018
Disclaimers: This distribution is by CIMB Investment Bank Berhad (“CIMB”) in Malaysia only. The views are our own as of this date and subject to change. No further distribution is allowed without our prior written consent. CIMB, its related corporations, affiliates and business partners make no recommendation, offer or invitation to transact in any securities, futures contracts or other instruments. Please make your independent evaluation, consider your own investment objectives and financial situation and consult your own professional advisers before participating in any transaction.
