Ge-Shen's 3Q earnings surge over 24-fold

by **Cals** Wed 11 Nov 2015, 00:19

Ge-Shen's 3Q earnings surge over 24-fold

By Chester Tay / theedgemarkets.com | November 9, 2015 : 8:25 PM MYT

KUALA LUMPUR (Nov 9): High precision plastic components maker [size=16]Ge-Shen Corp Bhd ([You must be registered and logged in to see this image.] Valuation: 1.10, Fundamental: 1.80) saw its net profit jump more than 24-fold to RM7.39 million for the third quarter ended Sept 30, 2015 (3QFY15) from RM288,000 a year ago, on contribution from its 75%-owned newly-acquired subsidiary Polyplas Sdn Bhd, better results from its existing plastic segment, disposal of loss-making subsidiaries and seasonally higher production volumes.

Earnings per share (EPS) rose to 9.6 sen from 0.37 sen.

In its filing with Bursa Malaysia today, Ge-Shen also noted that 14.4% of the group's revenue in the quarter under review was meant for export purposes, which resulted in it benefiting from the recent appreciation of the US dollar against the ringgit.

Ge-Shen's revenue for 3QFY15 stood at RM45.12 million, an 82.7% increase from RM24.69 million in 3QFY14.

For the nine-month period (9MFY15), the group posted a net profit of RM10.86 million, which was more than sevenfold higher from RM1.28 million in 9MFY14, while revenue jumped 44.7% to RM99.08 million from RM68.47 million in 9MFY14.

EPS increased to 14.12 sen in 9MFY15, from 1.66 sen a year ago.

Although the recent depreciation of ringgit had a positive impact on Ge-Shen, the group said a continual depreciation will post a mixed result due to the risk of higher domestic inflation, imported wage inflation and losing competitive workforce to other economies, as the higher minimum wage in Malaysia would increase the group's operating cost.

Moving forward, other than improving operating margins through operational efficiencies, Ge-Shen said it is also looking into increasing its manufacturing capacity via additional machineries and sophisticated technology.

In a separate filing with Bursa today, Ge-Shen said its executive director Chan Choong Kong has been redesignated as joint managing director (MD) effective immediately.

Chan was appointed to his current post on April 23 this year. As at Sept 21, Chan has a 56.39% indirect stake in Ge-Shen.

The group's incumbent group MD is Wong Yee Keh, who owns 4.98% direct interest as at Sept 30.

Ge-Shen shares closed one sen or 0.69% higher at RM1.46 today, giving it a market capitalisation of RM111.5 million.

(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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