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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
Press Metal Aluminium is the largest integrated aluminium producer in Southeast Asia. Over the past five years, the company has strengthened its market position by improving cost efficiencies, expanding into new high-growth markets, and enhancing its sustainability focus.
These strategic initiatives have contributed to its improving financial performance, as illustrated in the two middle charts. However, its performance trends also coincided with the uptrend in the aluminium price cycle.
As shown in the leftmost chart, Press Metal’s stock price is currently lower than its past three-year high. At the same time, it is positioned within the Gem quadrant, indicating strong business fundamentals.
This positioning suggests that the market may be anticipating a downtrend in aluminium prices, which could impact future earnings. Is the market wrong?
• If the market is right, the company's stock would be overvalued based on historical performance.
• If the market is wrong and aluminium prices remain strong and companies like Press Metal may continue to thrive.
This raises an important question: Is the company’s growth primarily driven by operational improvements, or is it largely influenced by rising aluminium prices?
Gadang - Stable, Undervalued, and Poised for Growth?
Gadang is a stable player with a diversified business model spanning construction, property development, and utilities. The fundamentals suggest steady growth potential, especially with increasing contributions from renewable energy projects. You can see this from the P&L charts showing the past 5 quarters and 5 years performance.
The current market price suggests Gadang is undervalued relative to its book value and long-term growth potential. However, the thin margins and cyclical exposure may temper immediate upside.
Gadang position on the border of the Goldmine and Turnaround quadrants is in line with the fundamentals and investment risk.
A fundamental investor should watch for a combination of operational improvements (higher margins, utilities growth) and external drivers (infrastructure spending) as catalysts for re-rating eg
• The expansion of renewable energy initiatives.
• Winning large, high-margin contracts.
• Increasing the dividend or enhancing shareholder returns.
Over the past 5 years, Systech shifted from being primarily a provider of software and e-business solutions to focusing on AI, IoT, digital transformation, and cybersecurity. It divested its loss making e-business solutions and acquired capabilities in digital transformation and AI
These strategic changes reflect an adaptation to evolving market demands and a drive toward long-term growth. These acquisitions, together with its focus on high-growth areas like IoT, and cybersecurity and operational efficiencies, has help to drive revenue growth in recent quarters as can be seen in the chart.
The strange thing is that the market price has come down since Sep 2023 shown below. Is the market suggesting that these growths cannot be sustained since Systec falls into the high-investment risk, poor business fundamental quadrant on the Fundament Mapper?
Apart from continue revenue and earnings growth, look out for the following in the next few quarters to asses that growth is sustainable
SKB Shutters – will there be a multiple expansion?
If you stand back and look at SKB performance over the past decade, you can see that its performance post-2021 is very different from that pre-2021. This is well illustrated by the return chart.
Is this a flesh in the pan or a sustainable change? Over the past few years, the company had introduced new products. It cited the the mandatory deployment of Insulated Fire Shutters for compartment walls as one driver for this change driving growth.
There are also operating and efficiency improvements. Its improvements is reflected in its position as a company with one of the better fundamentals on the Fundamental Mapper.
The market price of SKB has been up-trending since Q1 2024. Based on a historical trend projection by the Fundamental Mapper algorithm, it is a borderline investment risk.
But if you think that the performance trend will continue, the future will be much better than the past. In this case, expect growth in earnings. Give market behavior, better earnings can lead to “multiple expansion”. When this happens, the stock today will look cheap. Is this what speculators are looking at?
Cuscapi – has the market run ahead of its fundamentals?
Over the past 8 years, Cuscapi business direction had evolved from a strong focus on restaurant management solutions, to include advanced technologies, ESG commitments, and digital asset trading. This change in business direction have led to improving performance.
You can see from the middle chart the revenue growth over the past 3 years and the change from losses to profits in 2023. The profit trend will continue in 2024
Cuscapi's Quicksand position suggests that while the company has made strides in improving its revenue and profitability, its fundamentals and investment appeal remain weak.
The move into digital assets, and AI-driven services involves a steep learning curve and significant capital investment. The Quicksand position suggests that the market may have run ahead of its improving fundamentals. What are the signals to look for when considering Cuscapi?
• Clearer evidence of scalability and market acceptance for its new business focus.
• There is a focus on operational inefficiencies to strengthen its fundamental
Asia File growth 2 decades ago was driving by the stationery business. But we all know that this sector is facing some digital disruption. The company has long recognized this threat and ventured into the consumer and foodware products in 2017/18 to mitigate this.
From 2018 to 2024, the revenue from the filing segment declined from RM 352 millon to RM 268 million, a RM84 million decline. Based on the 6 months ended for 2025, we will see a continuing decline.
But the revenue from the consumer and foodware products segment has not grown enough to offset the declining filing revenue. I projected that the 2025 revenue contribution from this segment would be at best RM 50 million. At the same time, the segment margin is not as good as that for the filing segment based on 2024 results.
If I want to be positive, I would say that the declining filing segment trend seems to be slowing down looking at the middle chart. But your guess is as good as mine where the bottom will be.
From a big picture perspective, the company currently falls into the Goldmine quadrant - low investment risk, good fundamentals. The market price has also declined from the past 3 years high.
So there is still an investment case for investors with a long-term outlook and a focus on undervalued opportunities. But you must believe that the company still has time to meet the digital disruption challenge.
Eksons Corporation: A Cash Trap Waiting to Break Free?
In October 2023, I noted that Eksons was a classic cash value trap—rich in cash but lacking substantial business operations. Fast forward to today, and not much has changed.
The company still struggles with meaningful operational improvements, which has hindered its ability to achieve sustainable growth. This is why it remains in the "Turnaround" quadrant of the Fundamental Mapper.
However, Eksons' deeply discounted valuation relative to its net assets and cash reserves presents an intriguing opportunity. For investors who believe in the management’s ability to execute a turnaround, this is a classic deep-value play with an asymmetric risk-reward profile.
The charts provide clues on what to watch for as potential catalysts for a re-rating of Eksons' stock:
• Revenue and profit growth: Signals of stabilization or upward trends.
Over the past five years, ExcelForce has maintained a consistent focus on its core strategy of providing innovative, high-value software solutions. Its strategy has generally revolved around technological improvement and market adaptation, with sustained efforts to balance innovation with profitability.
There were significant revenue and profit increases, particularly during 2020 and 2021 following this. However, there was some contraction in 2023/24 suggesting a potential market or operational challenge.
For the fundamental investors, the key is identifying catalysts that can unlock EForce’s intrinsic value over time. Here are some announcements to monitor:
• Development of new software solutions or platforms leveraging emerging technologies like AI, cloud computing, or blockchain.
• Entry into untapped regional markets or sectors beyond financial services (e.g., healthcare IT or government systems).
• Implementation of cost-efficiency programs to enhance operating margins.
These are good indicators of potential growth in the topline and bottomline