Hot Stock SAM rises 10% as investors think it undervalued, prospects intact

by **Cals** Tue 23 Jun 2015, 01:48

Hot Stock
SAM rises 10% as investors think it undervalued, prospects intact

KUALA LUMPUR (June 22): Shares in SAM Engineering & Equipment Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) surged as much as 42 sen or 10% as investors are of the view that the company provides a better earnings prospect and is undervalued.
At 10.36am, the stock was traded at RM4.58, after rising to a high of RM4.62 in the morning trades, making it the top gainer across the bourse.
Some 208,800 shares changed hands. With the current price, SAM (fundamental: 2.5; valuation: 2.6) has a market capitalisation of RM354.59 million.
It was featured as the Insider Asia's Stock of the Day on June 11 this year.
"Investors are in view that the counter is cheap," said AllianceDBS Investment Bank remisier Raymond Foo adding it was trading at about 6 times of its price to earnings ratio.
"The counter has been in the uptrend since end of last month, after it announced earnings for the fourth quarter (4Q) and full financial year 2015," he added.
"Investors are anticipating the group to post a stronger and better earnings in the first quarter of financial year 2016 (1QFY16), which is expected to be released in the next two months," Foo said.
He expects the counter to breach RM5 level should it be able to maintain its current earnings pattern.
Meanwhile, in a technical analysis last Monday, RHB Research said SAM was testing the RM4.35 resistance level in its latest session.
"Traders may buy if this level is surpassed in the near term with a target price of RM5," it added.
The firm added the stock may trade sideways if the RM4.35 level cannot be surpassed.
"In this scenario, further support may then be found at RM3.88, where traders can exit upon a breach," it said.
SAM is a subsidiary of Singapore Aerospace Manufacturing Pte Ltd, which is, in turn, wholly-owned by Singapore's sovereign wealth fund, Temasek Holdings (Private) Ltd.
In FY15, the group's net profit increased 22.3% to RM34.6 million, driven by higher contribution from the aerospace division.
Moving forward, SAM is expected to continue to benefit from the still growing aerospace industry.
The company has a debt-free balance sheet with cash of RM82.8 million at end-2014.
(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.)