FCW Holdings Bhd (-ve)
SHARES in FCW Holdings Bhd (fundamental: 0.9/3, valuation: 0.8/3) triggered our momentum algorithm with a two sen drop in its share price, equivalent to almost 2%, while volume was thin with 6,100 shares traded.
This compares to a 200-day average volume of 2,894 shares.
FCW settled at RM1.00 as at market close yesterday, giving it a market capitalisation of RM249.99 million.
The group derives its revenue primarily from property rental, contract manufacturing and wholesale of cosmetics, toiletries and household products.
It is also involved in manufacturing and marketing of power, telecommunication cables and wires through an associate company.
FCW’s net profit for the third quarter ended March 31, 2016 shrank by 32% to RM2.66 million, from RM3.91 million a year ago, mainly dragged down by the group’s property development division after a cessation of rental income received upon completion of tenancy agreements.
The absence of rental income was partially offset by improvement in the group’s contract manufacturing and telecommunication cable businesses, thanks to higher profit margin from better product mix and lower foreign exchange loss.
For the quarter under review, FCW reported a RM6.51 million revenue, which grew 10.8% from RM5.87 million last year, thanks to improved sales for the Chinese New Year festival in February.
Moving forward, FCW’s management expects the revenue and profitability of the contract manufacturing division to remain challenging in the export markets, while the sluggish economy may dampen demand in the remaining financial year.
As for the telecommunication cable sector, the management expects the business to remain challenging in view of the keen competition in both the local and export markets, and the sluggish global economy may dampen demand for metal cable products.