Stock picks for 2016: Ewein

by **Cals** Mon 04 Jan 2016, 23:24

Stock picks for 2016: Ewein
By Chester Tay / The Edge Financial Daily | January 4, 2016 : 9:56 AM MYT

This article first appeared in The Edge Financial Daily, on January 4, 2016.

Ewein Bhd ([You must be registered and logged in to see this image.] Valuation: 1.10, Fundamental: 1.70)
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Ewein Bhd is set to see meaningful full-year contributions from its property development project in Penang this financial year ending Dec 31, 2016 (FY16), which is expected to bolster its pre-tax profit significantly.
The Penang-based company, which was originally involved only in the manufacture of precision sheet metal fabricated parts, is jointly developing the RM800 million City of Dreams condominium project in Bandar Tanjong Pinang (BTP), Penang with Consortium Zenith BUCG Sdn Bhd, and bagged its second project on the island last week.
However, Mercury Securities head of research Edmund Tham is looking for more visibility in Ewein’s financial figures as it remains to be seen if the group can roll out its maiden property development with satisfying sales.
“If everything happens as planned, it would be positive for Ewein. But it is still early to tell now. We are waiting to see its fourth-quarter ended Dec 31, 2015 (4QFY15) results, which will be released next month (Feb 2016),” he said.
The recent announcement of its third-quarter results saw a jump in its earnings of 16 times year-on-year to RM6.42 million, mainly driven by its property development business from the City of Dreams project.
Ewein’s revenue more than doubled to RM29.21 million in 3QFY15, from RM13.43 million in 3QFY14. The strong third-quarter results pulled up its performance for the nine-month period (9MFY15), with its net profit increasing 10 times to RM7.62 million, while revenue rose 46.3% to RM49.48 million.
Notably, the group’s short-term loans and borrowings ballooned 6.7 times to RM42.82 million as at 3QFY15, from RM6.36 million last year. Nevertheless, its cash and cash equivalents also surged 75.57% to RM49.24 million for the quarter under review, from RM28.04 million as at 3QFY14.
Apart from City of Dreams, Ewein is proposing to develop three blocks of luxury serviced apartments on a 4.4252-acre (1.79ha) piece of freehold land at BTP, which will have a gross development value of RM1 billion.
Dubbed City of Dreams II, the service apartments will comprise 891 units.
In the past year, Ewein’s share price climbed 180.1% from 45.7 sen on Dec 31, 2014 to RM1.28 last Thursday, giving it a market capitalisation of RM274.8 million.