Friday, 4 October 2013
China Stationery – too cheap or too good to be true?
CSL’s shares are currently trading at just one time earnings and one-quarter of its net cash value per share. Put in another way, imagine paying 25 sen for a one ringgit note!
Its stock price has fallen from a 52-week high of RM1.13 to just 22.5 sen and one-fifth of its IPO price of 95 sen back in February 2012. By comparison, its book value per share is RM1.18 sen and net cash value per share is 86 sen, as at June 2013.
CSL’s past financials show strong earnings and balance sheet strength.
In 2012, the company reported net profit of just under RM247 million, with EPS of 20.8 sen. Results for the first half of 2013 suggest a similar annualised performance, implying a full year EPS of around 20 sen – near its current stock price.
Despite these seemingly attractive valuations and strong fundamentals, the company’s major controlling shareholder, Lead Champion Ltd has been paring its stake aggressively, a move which does not send a positive signal to investors.
Is something amiss? Is the massive selling by insiders a precursor to something negative? Or is CSL shaping out to be the market’s “cheapest” stock right now?
For the full analysis, read The Edge Malaysia this weekend ...