Stocks With Momentum: Brite-Tech

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Brite-Tech Bhd
BRITE-TECH (Btech) is involved in water purification and wastewater treatment solutions. The company operates three testing laboratories, under the Spectrum Laboratories brand, to provide analytical and environmental monitoring services such as soil analysis and air emission monitoring.

Btech has seen a sharp increase in trading volume and prices since last Wednesday. From just 45,500 shares on Tuesday, volume surged to 1.2-1.3 million shares on Wednesday and Thursday, and 4 million shares on Friday. In three days, its share price gained 36% to close at 34 sen.

It is unclear what caused the sudden surge in interest, although it should be noted that Btech’s shares periodically attracts bouts of speculative buying – only to fizzle out later.

There was also a surge in mid-Sept 2014, where the stock price rallied by 50% within a month to 33.5 sen with volume hitting five million shares. However, all those gains were gone a month later and the stock retraced back to the 20 sen level by mid-Oct before the recent ascent.

Btech’s revenue increased from RM 15.9 million in 2010 to RM 24.6 million in 2013. Net profit in 2013 rose 37.3% to RM3.4 million. Although 1H2014 saw higher net profit of RM 3.1 million on revenue of RM11.6 million, RM 1.8 million of this was gain on land disposal. Stripping that out, net profit for the half-year was 28.4% lower at RM 1.3 million.

Btech is trading at 1.7 times book with a trailing 12-month P/E of 16.2 times. The company has net cash of RM 16.1 million as at 30 June 2014, or 6.4 sen per share. Dividend for 2013 totalled 0.63 sen per share, or a yield of 2.1%. The company has low free-float, being 64.8% owned by its three major shareholders Pang Wee See, Chan Ah Kien and Tan Boon Kok.

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This article first appeared in The Edge Financial Daily, on November 10, 2014.