FIGURE 1: DAGANG NEXCHANGE
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1. GENERAL
INTRO: Dagang NeXchange Bhd is a leading service provider in Malaysia’s
trade facilitation and energy sector.
2.
NOTABLE
POINTS:
a. DNEX’s trade facilitation and eCommerce segment
contribute the key source of the Group’s income, while the Group’s energy
division provides equipment supply and maintenance for the oil and gas
industry, oilfield drilling services, invests in upstream oil and gas
businesses and operates power plant in Bangladesh.
b. In FY2019, DNEX received contract extension from
the Government of Malaysia for the National Single Window for Trade
Facilitation awarded a contract to re-engineer the tax self-assessment system
by the Inland Revenue Board of Malaysia in a contract worth RM42.75 million. In
addition, its Energy division won a contract worth RM11.8 million from PETRONAS
Dagangan Bhd for the supply, installation, testing, commissioning and maintenance
of automatic tank gauging for some 200 PETRONAS stations.
c. The Group has recorded a marginal decline in
revenue with completion of several key projects at the first half of 2019.
Approximately 70% of the Group’s revenue is generated from the Government sector.
Therefore, earnings by the Group are fixed and cannot be adjusted despite the
increasing costs.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 290.4 million as reported in 2019 annual report, this is a medium revenue company. Between year 2011-2019, the counter’s revenue has been on a rising trend. The Profit Before Tax (PBT) and Profit After Tax (PAT) are also on an overall rising trend.
b. SHARE PRICE: from Jan 2016 to Jan 2021, share
price ranged from RM0.25 to around RM0.60, since Feb 2021, share price has
surged to around RM0.75. The surge in share price followed the news of DNEX
acquiring SilTerra, a wafer fabrication plant that has potential to bring in
good profits for DNEX in the future.
c. EARNING PER SHARE (EPS): earning per share in last 5 years was overall fluctuating, ranging from 1.45 to 10.45 sen.
d.
PRICE TO EARNINGS (P/E) RATIO: N/A
e. FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 10.7
million, which is around 1.7% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2019 financial year, DNEX did
not declare a dividend payout to its shareholders.
b.
DIVIDEND PAYOUT RATIO: N/A
c. CONSISTENCY: This counter’s dividend payout has
been inconsistent (dividend paid to shareholders in 3 years out of 5 years) in
the last five years.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2019 financial year, DNEX
reported a moderate return of shareholders’ equity, at 7.61%.
b. COST-TO-INCOME RATIO: the cost-to-income ratio
is 511%, which is in the medium range.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 35%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d. CASH FLOW: cash flow is positive, at around RM 27.3
million, equivalent to RM 0.01 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is moderately well supported by institutional investors, there are 7 institutional
investors at top 30 major shareholders list, including EPF (2.28%), few investment
funds but not including insurance funds. Its major shareholders are Arcadia
Acres Sdn. Bhd. (20.48%) and Censof Holdings Berhad (6.66%).
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