A Small Cap

Malaysian-listed small cap Harbour-Link Group Berhad has seen its share price falling close to its 52-week low. Currently, it has a market cap of RM145 mil (or RM0.795 per share) and is also trading at undemanding trading multiples (P/E: 2.517x and P/B: 0.43x). Would we ever see a rebound in the share price of this company?

Profile of Harbour-Link Group

Incorporated in 2002, Harbour-Link Group Berhad consolidated all related business activities and was officially listed on the Main Market of Bursa Malaysia Securities Berhad on 6 January 2004. With its roots firmly planted in the shipping and total logistics services, engineering & construction industry for the past 40 Years, Harbour-Link Group has grown steadily and built multi-disciplinary industry expertise covering a comprehensive range of services to fulfill its client’s needs. Today, Harbour –Link Group’s business footprint extends across the Intra-Asian region and it has successfully established itself as a reputable brand-name within the industries that it operates. Read More

Desktop Valuation

For illustration, we have performed a simple high-level desktop valuation of the Company based on the following key assumptions:

  • Long term earnings is assumed at RM37.2 mil (based on a 5% discount to annualised FYE2017 projection to reflect a challenging business environment)
  • Perpetual growth rate is assumed at a nominal rate of 1.0%
  • Assumed return rate is 15.0%
  • Margin of safety of between 10.0% – 25.0%

HL_Equity Valuation.png

Indicative equity valuation is projected to be RM1.46 per share. Using a margin of safety of between 10.0% and 25.0%, we may expect a valuation range of between RM1.10 – RM1.32 per share.

Technical View

Short term remains bearish. Nevertheless, we are seeing some oversold position as shown by the technical indicators. Expecting support at RM0.71, with some resistance at around RM0.91.

HL_TA_2.jpeghl_ta_1

Insider Movements

Some insider buy transactions around RM0.94-0.95, shown as follows:

insidertrades.png

Analysts’ View

Maybank IB has a BUY recommendation as well as 12 month target price of RM1.02 per share.

MBB.png

Latest Company Prospects

The company expects the business environment to be challenging:

pros.png

Final Remarks

Potential trading opportunity between RM0.71 and RM0.91, with potential upside of above RM1.00. Nevertheless, it is important to note that since global trade is slowing down, this may create potential downside to this company in the short-medium term.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR RELATED INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

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