KUALA LUMPUR (Feb 21): EG Industries Bhd shares have been consistently climbing over the past three weeks, and ended among Bursa Malaysia’s top gainers with an over 24% climb on Tuesday (Feb 21). 

The electronics manufacturing services provider received a fresh catalyst after announcing stellar profits for the second quarter ended Dec 31, 2022 (2QFY2023) on Monday, which sent its share price 28 sen or 32.56% higher to an intraday high of RM1.14 on Tuesday, before paring gains to close at RM1.07, still up 21 sen or 24.42%. 

The counter saw 85.94 million shares change hands. At RM1.07, the group was valued at RM437.9 million. Year to date, the counter has risen 98.15%. 

It is worth noting that the counter has been steadily climbing since it announced a private placement exercise on Feb 8. Over the past three weeks, it has climbed 75.41% — from Feb 8’s close at 61 sen to Tuesday’s RM1.07. 

At RM1.07, based on annualised earnings per share of 8.62 sen, the stock was trading at a price-earnings ratio of 12.41 times.

Notably, a week after the private placement announcement, Singapore-listed Jubilee Holdings Ltd ceased to be a substantial shareholder of EG Industries last week, after it offloaded two blocks of shares — 10.33 million shares and 12.25 million shares respectively — on Feb 10.

Before the disposal, Jubilee — a private vehicle of Singapore businessman Datuk Terence Tea Yeok Kian — held 34.51 million shares or an 8.43% stake in the group.

On Feb 8, EG Industries proposed a private placement of up to 40.93 million new shares — which represents 10% of EG Industries’ issued shares — to independent investors at an issue price to be determined and fixed later.

However, at an indicative issue price of 54.75 sen per new share, the group said it expects to raise RM22.41 million.

From the proceeds, RM16 million has been earmarked to fund the expansion of its manufacturing facility in Sungai Petani, Kedah, and construct an additional manufacturing plant at the Batu Kawan Industrial park in Penang — which is expected to be completed by the first quarter of 2024.

Another RM5.91 million will be utilised for working capital — the purchase of raw materials and consumables.

For 2QFY2023, EG Industries’ net profit rose by 16.34% to RM9.2 million from RM7.9 million a year earlier, mainly due to higher sales from a more favourable product mix, coupled with RM1 million fair value gain on a quoted investment.

Earnings per share climbed to 2.19 sen, from 2.08 sen previously. Quarterly revenue rose 4.43% to RM374.38 million, as compared to RM358.48 million a year ago, on the back of higher sales orders from existing key customers for consumer electronic products, 5G wireless access and photonics modular related products.

For the six months ended Dec 31, 2022 (1HFY2023), EG Industries’ net profit surged 84.14% to RM18.17 million from RM9.86 million last year, mainly due to higher sales from products with better margins and a RM4.3 million fair value gain on a quoted investment.

“However, the improved margin has been partially offset by the higher interest expense as a result of increased interest rate and higher borrowings to part-finance the group’s expansion plans,” it noted.

Revenue for the six-month period increased by 35.87% to RM754.71 million versus RM555.47 million last year, due to higher sales.

EG Industries said that despite continued challenges — namely from rising interest and inflation rates, increased minimum wage and ongoing US-China trade war — it remains optimistic on its outlook for the financial year ended June 30, 2023 (FY2023).