Leader Universal

This company involve in 3 major businesses where 1) they are 1 of the largest cable & wire producer in South East Asia 2) in power generation business 3) a property development player where it developed several projects range from residential to commercial.

Cable & wire is the bread and butter of its revenue while power generation will become an important growth component & property business is just minimal.

The company has recently secured an agreement of 25 years from Combodia to develop a 230KV power transmission system worth around USD107m.

This will somehow translate to approximate of RM374m revenue but spread across to how many years was never mentioned in detail. Assuming just lump or whack this figure in the coming 4Q that will boost up its 4Q revenue to about RM900m…wow a fantastic & significant increase, more or less can match with BJTOTO’s revenue, this will in turn boost up the EPS drastically I presume but somehow profit margin for Leader is relatively very or extremely small I would say about 4% I wonder why ?? Maybe due to the operating profit margin for cable & wire business is very small about 3%. So, with that will give us RM36m net profit for 4Q & this represent a EPS of 8.24sen add up previously accumulated 3Q of 9.63sen, total is 17.87sen.

Basing on current price (RM0.91) the PE is trading at 5.09sen. Looks reasonably low enough for consideration but one needs to be careful of it high operating cost and low profit margin, any glimmer of unsustainable revenue will definitely run into red but there is 4% cushion constituted from the above power project likely to be quite stable for now.

***Some risk factor to consider :-

As I just dump the project figure to 4Q, this is not accurate at all as the revenue should span across to it entire project milestone.

At the point of writing this, I do not own any Leader shares as yet. The above do not serve as a buy call.