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Tuesday, November 17, 2015

Daibochi surges 11% on investors' optimism

KUALA LUMPUR (Nov 17): Daibochi Plastic and Packaging Industry Bhd (Daibochi) ( Valuation: 0.50, Fundamental: 1.50) shares hit a new 52-week high and became the top gainer at mid-morning today, as investors viewed it as a laggard amid the weaker ringgit.

Daibochi opened 2 sen higher at RM4.73 this morning, and rose as much as 53 sen or 11.25% to RM5.24, its fresh 52-week high.

At 11.30am, the packaging manufacturer rose 51 sen or 10.83% to RM5.22. It saw 258,200 shares traded, bringing its market capitalisation to RM569 million.

Interpac Securities Sdn Bhd head of research Pong Teng Siew told that Daibochi was seen as a laggard as its peer Tomypak Holdings Bhd ( Valuation: 1.10, Fundamental: 2.10) had been climbing up steadily.

According to Bloomberg statistics, year-to-date, Tomypak share prices have gone up 122% (based on the share prices of RM2.85 at 11.30am), while Daibochi share prices had risen only 22%.

An analyst who covers Daibochi said, investors are expecting Daibochi to benefit from the weakening of ringgit.

However, she explained that analysts have to wait for the company's briefing tomorrow to have a clearer picture about the packaging firm.

She said, the management mentioned in its earlier result report that ringgit enhances the competitiveness of export-oriented manufacturers like Daibochi.

Daibochi posted 15.7% higher net profit of RM7.2 million for the second quarter ended June 30, 2015 (2Q15), from RM6.2 million a year ago, benefiting from higher export sales, weaker ringgit and favourable product mix.

The company’s revenue also rose 3.1% to RM89.7 million, from RM87 million a year ago, with exports contributing 52% of the turnover.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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