Dancomech - Benefit from high CPO and Crude Oil ?

 

 

Company : Dancomech – Benefits from High Crude Oil and CPO?

 Business:

Manufacture of pumps and trading of valves, pump, gauges and recorders in oleochemical, Oil & Gas, water and wastewater and HVAC industries. This is mainly for plants maintenance purpose.

The trading division contribute 70% of the group revenue which is mainly from Oil and Gas and Oleochemical. Company also diversified to metal stamping business by acquiring MTL company in 2020 that produce tools and die.

A small cap company. It has been chosen as Asia’s 200 best under a billion company but not sure this is relevant to their actual share performance.

 

Fundamental

Company is in net cash position with clear growth of revenue. However, the CAGR-PAT is very small and profit margin is single digit at 8%.

 

 

Past 5 years revenue record show a clear trend of growth. Profit margin is declining especially in 2021. Based on their annual report, revenue growth is because of acquired metal stamping business, electronic, electrical & instrumentation. Despite revenue almost double, the profit after tax increase is very small (RM0.3 million).  

 

  

Lates Q4 result:

Q4 revenue increase and profit margin slightly improved.

 

Prospect:

• Potential benefit from high CPO and crude oil price that allows plants to spend more on maintenance.
• Revenue contribution from Metal Stamping business, Material handling Solution and E&E division are yet to reflect fully in FY 2021.

 

 Dividen:

 

Dividen payout ratio is 35% of its profit.

 

Technical Analysis on Chart:

Share price on downward trend because of the Warrant is about to expire. Hence adding more mother shares to the market. It seems like high risk and high volatile company.

 I don’t have Dancomech shares but good to monitor their performance especially profit after tax in Q1.