Looking forward to a better 2019
Prathab V 

AMIDST a challenging global business environment and increased volatility, it was a surprise that a Taiwanese-controlled company quietly emerged as the best price performer on Bursa in 2018.

Dufu Technology Corp Bhd is a manufacturer and trader of hard disk drive components and precision metal tools. Buoyed by increasing demand for semiconductors in the United States, Dufu’s share price rose 200% to RM2.34 on Dec 13 from 78 sen at the end of 2017. The company’s nine-month profit before tax had jumped 81.64% to RM6.64 mil in 2018 from the corresponding period in 2017.

According to the company, its stellar performance was mainly due to “the increase in revenue, economies of scale, favourable product mix and effects of foreign exchange from the strengthening of the US dollar against the ringgit towards the end of September 2018”.

While demand for hard disk drives has increased, the favourable foreign exchange rate also played a part, firmly establishing the company as the best Bursa performer in terms of share price jump.

Close behind Dufu is foam mattress maker Lee Swee Kiat Group Bhd, whose share price rose 167% to 94 sen on Dec 13 from 35 sen at end-2017. The company’s net profit for the first nine months of FY18 more than doubled (up138.35%) to reach RM7.51 mil compared to a year ago.

In third place is construction, water and waste treatment company, Merge Energy Bhd, whose share price soared by 155.88%. However, unlike Dufu and Lee Swee Kiat, Merge Energy is the worst-performing company in terms of profitability in the construction sector. The company incurred a loss of RM10.28 mil for its full year 2018 compared to a profit of RM1.68 mil in 2017.

Despite its poor performance, the company is currently the subject of a mandatory takeover offer by its major shareholders Westiara Development Sdn Bhd (33%), Cerdik Cempaka Sdn Bhd (15.84%), Fine Approach Sdn Bhd (7.91%), Anjuran Utama Sdn Bhd (6.61%), Datuk Lee Tian Hock (2.24%) and some persons acting in concert. On Nov 29, an offer was made to Merge Energy shareholders for a total of RM38.684 mil or 88 sen per share. The counter has been rising steadily from 27.5 sen at end-September to 88 sen on Dec 20.

The Top 10 price loser on Bursa was another O&G company, Daya Materials Bhd, whose shares declined more than 86% to rest at just one sen. Next came Comintel Corp Bhd, a system integrator and IT solutions company, which saw its share price dwindling to 10 sen from 71 sen a year ago.

The shares of another energy and logistics company, Scomi Group Bhd, wound down to five sen from 31 sen a year ago. In August, Scomi Group CEO Shah Hakim resigned to focus on his other business interests.

Prathab V

This article first appeared in Focus Malaysia Issue 314.