Stocks With Momentum: ConnectCounty Holdings

by **Cals** Wed 21 Jan 2015, 02:49

Stocks With Momentum: ConnectCounty Holdings

By theedgemarkets.com / theedgemarkets.com | January 20, 2015 : 10:01 AM MYT

ConnectCounty Holdings Bhd
THE past few days has seen renewed investor interest in ConnectCounty Holdings Bhd (Connect). The stock surged 2.5 sen or 14.3% to 20 sen, with over 45 million shares changing hands in a week.

Listed in ACE Market in 2005, Connect provides cables, wires and connectors such as HDMI cables and USB connectors to the interconnect industry. In 2013, the electronic equipment manufacturer derived 57% of its revenue from the US, while Singapore and China contributed 24% and 19% respectively.

Though annual turnover has been fairly steady, Connect has been in the red since 2011. The company faces escalating operations costs such as minimum wage rates and labour shortages in Shenzhen, China where their factory is located.

For FY2014, Connect managed to post a profit of RM0.2 million in 1H2014 but fell back into the red in the latest quarter due to an impairment of RM0.95 million on its investments. In 2014, Connect bought into MyGenBizz Bhd (MGB), with a premium of RM0.9 million over the shareholders’ fund of MGB of just RM0.1 million, but the performance of the latter has been disappointing.

Over the last six months, Connect has seen a reshuffling of its board, as well as the entry of a new substantial shareholder — Yap Shuh Jian with a 5.7% stake — via a private placement in October 2014. With the change in shareholders and boardroom, it remains to be seen whether the new management could turn the loss-making cable manufacturer around.

Connect has a low Fundamental Score of 0.95 and a Valuation Score of 0, both out of a maximum of 3. The company is in a net cash position of RM2.67 million at as 30 September 2014. The stock is trading at 2.59 times book. No dividends were paid for the past four years.

[You must be registered and logged in to see this image.]

This article first appeared in The Edge Financial Daily, on January 20, 2015.