Post Sabah CMCO….

Lately, we are seeing the following developments in the capital markets:

  • Gloves stocks are falling from their peak (imminent arrival of vaccine)
  • Re-orientation of portfolio from growth / momentum stocks to value stocks
  • Post approval of Budget, people are capitalising on the recovery theme

Sabah was badly impacted by the pandemic (thanks to politicians). Now that the cases in Sabah are declining, I would anticipate the economic activities to re-bound gradually. One proxy for recovery is Suria Capital, the Sabah-based port operator

Directional Assumption

Long Suria Capital

The Narrative

As mentioned above, if you believe in the recovery theme, this stock should do alright. Recent results are still mixed, but are showing gradual recovery.

KOTA KINABALU – Suria Capital Holdings Bhd (SCH) posted mixed quarterly results due to the pandemic-induced lockdown imposed nationwide. 

The Sabah-based port operator posted a lower revenue  of RM60.98 million for the third quarter ended September 30 (Q3 2020) compared to RM65.28 million for the same quarter last year. 

Net profit, however, clocked in higher at RM11.92 million than last year’s RM11.21 million. 

SCH’s main revenue driver remained the port operation segment, accounting for about 96% of the group’s total revenue from operations as of September 30. 

“Sabah Ports handled higher throughput, both in terms of cargo and container volume. Conventional cargo throughput improved by 41% to 6.78 million metric tonnes from a total of 4.82 million metric tonnes recorded earlier in the Q2 2020. 

“The major commodities handled by the ports consisted of liquid bulk (palm oil and petroleum products), fertiliser, palm kernel expeller (PKE), wood products and other general cargo.

“Container throughput also showed improved performance with 45.8% increase from 70,429 TEUs (twenty-foot equivalent unit) in the 2Q2020 to reach 102,649 TEUs as of 3Q2020,” it said.  

SCH’s share price ticked up 1.05% at 96 sen as of 4.20pm, giving the port operator a market valuation of RM333.72 million. – The Vibes, November 30, 2020.

As per management, the current prospect of the Company appears resilient for year 2020.

Investment & Trading Strategy

I will consider this as a short term trading opportunity. Current dividend yield is about 3.65% which is relatively better than the current bank FD rates.

Assuming an entry at below $1.00 (i.e $0.98-$0.99) – will consider possible cut loss at $0.915 and possible target prices ($1.085, $1.12 and $1.21)

Possible Downside Risks

Delayed or falling-below-expectation recovery will be the primary concern.

Disclaimer: This is not an investment / trading advice or endorsement. Please refer to the general disclaimer of blog. If in doubt, please consult your licensed financial planner / adviser.

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