Hot Stock ES Ceramics falls as much as 11.8%

by **Cals** Thu 29 Oct 2015, 00:55

Hot Stock

[size=28]ES Ceramics falls as much as 11.8%

By Meena Lakshana / theedgemarkets.com | October 28, 2015 : 3:29 PM MYT

KUALA LUMPUR (Oct 28): ES Ceramics Technology Bhd ([You must be registered and logged in to see this image.] Valuation: 0.80, Fundamental: 1.95)'s shares fell as much as 11.8% on what appears to be institutional selling following the announcement yesterday of less than rosy prospects by the ceramic mould producer for the year ahead.

At 2.49pm, the stock pared some of its losses but was still down 5.5 sen or 10% at 49.5 sen, after 40.4 million shares changed hands.

Yesterday, shares of ES Ceramics, which produces ceramic moulds used for the production of gloves and balloons, shot up to a five-year high at 55 sen on the heels of its first quarter financial year 2016 (1QFY16) results.

Year-to-date, the stock has risen 189.47%, outperforming the FBM KLCI, which has declined 3.2%.

Today, the stock has been picked as Insider Asia's Stock Of The Day in The Edge Financial Daily, and noted that the rubber industry's major expansion exercise over the next five years will drive demand for ceramic hand formers, and ES Ceramic produces hand formers for the glove industry.

"The stock trades at trailing price/earnings of 18.2 times, which is attractive relative to its growth, while the listed glove companies are trading at 15.7–39.6 times earnings," Insider Asia noted.

When contacted, SJ Securities Sdn Bhd remisier KC Goh said retail investors have been buying shares of the company, but institutional investors seem to be cashing out.

"Yesterday, institutional investors renewed buying. But today, they seem to be getting out, maybe after evaluating the prospects of the company," he said.

In a filing with Bursa Malaysia yesterday, ES Ceramics recorded a flat net profit growth of RM1.51 million or 0.7 sen per share in the first quarter ended Aug 31, 2015 (1QFY16), compared with RM1.154 million or 0.7 sen per share in 1QFY15 on higher taxes as well as depreciation and amortisation.

Revenue increased 8.64% to RM6.65 million in 1QFY16 from RM6.13 million in 1QFY15.

In notes accompanying its results, ES Ceramics said the group's profit before tax (PBT) rose 30.72% to RM1.54 million from RM1.18 million on higher revenue and improved operations.

On prospects, the company said continued escalation of production cost due to increase in essential cost of components and fluctuation in exchange rates may pose challenges to its operations and profitability.

ES Ceramics said it is taking measures to address the challenges and improve efficiency and is continuing to explore opportunities to enhance the group's performance.

Barring any unforeseen circumstances, the company said it expects to achieve a favourable performance the coming year.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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