Stocks With Likelihood Of Corporate Exercise: Eita Resources Berhad

by **Cals** Thu 12 Feb 2015, 01:04

Stocks With Likelihood Of Corporate Exercise: Eita Resources Berhad

By InsiderAsia / InsiderAsia | February 11, 2015 : 11:33 AM MYT

[size=14]Eita Resources Berhad ([You must be registered and logged in to see this image.] Financial Dashboard)
Started in 1996, EITA Resources (Fundamental: 1.7/3, Valuation: 1.2/3) manufactures elevators, busducts as well as electrical and electronic components. Its two key brands are EITA-Schneider elevators and Futurec busducts.

EITA is poised to increasingly ride on its elevator business, which it began manufacturing in 2002 with a technical collaboration agreement with German-based Schneider Steuerungstechnik GmbH. Revenue from the manufacturing of elevators and busloads increased 50% from 2010 to RM100.86 million in FY Sept 2014, with its share of group revenue increasing from 40% in 2010 to 50% in FY2014.

In end-November 2014, EITA was awarded a contract worth RM76 million from MRT Corporation Sdn Bhd to be the designated contractor to provide escalator and travelator systems for all underground stations for the MRT Sungai Buloh-Kajang Line, to be completed by end-2016. This project is worth almost 40% of EITA’s entire FY2014 revenue, and 75% of its manufacturing revenue. This also gives EITA a good chance to secure the second MRT line from Sungai Buloh to Serdang and Putrajaya.

EITA enjoys relatively stable revenue, profits and margins. Over the past five years, annualized revenue (its financial year end was changed from Dec to Sept in 2013) ranged between RM151.3 million and RM194.1 million. In the same period, net profit ranged between RM12.7 million and RM15.6 million while net profit margin was between 7.1% and 9.5%.

In FY2013, EITA paid 3 sen dividend which translates into a yield of 2.6%. The company had net cash of RM6.6 million as at end-Sept 2014. EITA is trading at a reasonable trailing 12-month P/E of 11.7 times and 1.3 times book. Comparatively, peers such as Mikro MSC ([You must be registered and logged in to see this image.] Financial Dashboard) are trading at a trailing 12-month P/E of 14.3 times and 2.8 times book, while K-One is trading at trailing 12-month P/E of 21.6 times and 4.3 times.

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This article first appeared in The Edge Financial Daily, on February 11, 2015.
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