KUALA LUMPUR (Dec 9): Shares of Kawan Food Bhd (KL:KAWAN) climbed to their highest in nearly five months on Monday, after the frozen food manufacturer announced a venture into distribution of information technology (IT) equipment.
Kawan Food added as much as nine sen or a little over 5% to RM1.76, its highest since July 18, 2024. The stock was trading at RM1.74 at 9.15am, giving the company a market capitalisation of RM633 million. Trading volume totalled 255,800 shares so far.
The proposed venture, involving the acquisition of engineering services and industrial automation firm Realtech Automation Sdn Bhd, appears to be on a “relatively small scale”, said Inter-Pacific Research, one of three research houses covering Kawan Food.
For now, the house maintained its ‘buy’ call and target price (TP) of RM2.20, based on 20 times forward earnings. The other two houses also have ‘buy’ calls on the stock, with their consensus TP at RM2.22, according to Bloomberg, implying a potential return of up to 34% in the next 12 months.
Shares of Kawan Food climbed in the first half of the year, thanks to robust earnings before erasing most of the gains, and the stock spent most of the second half in negative territory. Year to date, the stock is down just a little over 3%, partly propped up by share buy-backs.
In the first week of December alone, buy-backs totalled 1.5 million shares. To date, the company has racked up nearly 20 million net outstanding treasury shares, or about 5% of its total number of issued shares, according to the latest exchange filings.
Last Friday, Kawan Food announced a joint venture with several individuals, including its founder and major shareholder as well as its current chairman, to acquire Realtech for RM2.5 million.
Realtech was recently appointed as the agency and distributor of Super Micro Computer Inc in Malaysia, and the company has been working closely with the installation of servers within data centres in the past three years, Kawan Food said.