July 11

3 Bursa Malaysia small cap gems you should take note of

Malaysia has a population of roughly 32 million, and GDP of USD 359 billion. Moreover, it is also blessed with raw materials such as palm oil, iron ore, etc.

Backed by a boisterous economy, Malaysia has its own stock exchange known as Bursa Malaysia and it has approximately 930 companies listed on the exchange.

Every stock exchange and country have its own good growth companies. We have sieved through the 930 companies to discover 3 hidden gems that you should take note of.

#1 JHM Consolidation Berhad

JHM Consolidation Berhad provides design and development of micro-electronic components (“MEC”) to the complete design, fabrication and assembly of toolings for the manufacturing of these MECs. It focuses on three categories: 1) Components related to High Brightness Light Emitting Diode, 2) Fine pitch connector pins, 3) Other electronics component.

As of the latest quarterly report, JHM’s revenue dropped by 19.8% to MYR 48.5 million. Its net profit decreased by 37% to MYR 5.29 million. Free cash flow was a bright spot of the operations as it increased 241% to MYR 7.14 million. Cash balance was at MYR 45 million.

The poorer results reflected the COVID-19 situation, but the astute cash generation of the company puts it in a good spot to tide through the crisis. Moreover, Malaysia remains a manufacturing hub in the Asean region. With the China-USA rhetoric continuing, the possibility of supply chains moving to Malaysia is high. This will benefit JHM in the long-term.

JHM Consolidation last closed at MYR 1.51, which values it at a P/E ratio of 31 and dividend yield of 1.2%.

#2 Hartalega Holdings Berhad

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Hartalega Holdings Berhad is principally involved in the manufacturing and sale of latex and nitrile gloves for manufacturing, healthcare and laboratory sectors. The Group is currently the largest nitrile glove producer in the world. It has 8 manufacturing facilities and workforce of roughly 7800 people.

As of the latest annual report, Hartalega’s revenue increased by 17.5% to MYR 2.83 billion. Its net profit decreased by 3.4% to MYR 454 million. Free cash flow continues to be positive for Hartalega and came in at MYR 196 million for the year. Cash balance was at MYR 150.3 million.

Due to the pandemic, lifestyles have changed tremendously. As a result, gloves have become an essential item across many industries, especially healthcare. Hartalega is at the forefront of nitrile gloves production, and is poised to capture this change.

Hartalega Holdings last closed at MYR 16, which values it at a P/E ratio of 130 and dividend yield of 0.4%.

#3 OCK Group Berhad

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OCK Group is principally involved in the provision of telecommunication services equipped with the ability to provide full turnkey services. It covers services from all 6segments of the telecommunication network services market:

  1. network planning,
  2. design and optimization,
  3. network deployment,
  4. network operations and maintenance,
  5. energy management,
  6. infrastructure management

The Group has expanded its regional footprint through expanding its presence in Myanmar, Vietnam, Indonesia, Cambodia and China.

As of the latest annual report, OCK’s revenue increased by 3.5% to MYR 473 million. Its net profit decreased by 3.7% to MYR 31 million. A good sign is that free cash flow turned positive for and came in at MYR 35.5 million for the year. Cash balance was at MYR 116.9 million.

5G network is all the rage now across the globe and every tech company wants a piece of it. OCK is a growth story and is a key beneficiary of the 5G deployment and infrastructure projects under the national fiberisation and connectivity plan.

OCK Group last closed at MYR 0.57, which values it at a P/E ratio of 16.8 and dividend yield of 1.8%.

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Tags

Bursa Malaysia, Hartalega Group, JHM consolidation, OCK group, small cap stocks


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