OKA (7140) - OKA is shaken down for a good buy up
OKA Corporation Berhad (OKA - 7140) had been one of the better performing company dealing in precast concrete products in the KLSE despite the global challenges in volatile currency and low crude oil prices.
I had first covered on OKA back on 9th May 2016 (OKA - Topping The Packs). OKA was trading at the range of RM 1.05 then, with a forecast of the company to deliver FYE 2016 with an EPS of 13 cents.
As a result, OKA indeed delivered FYE 2016 with 13.07 cents despite the lower revenue compared to FYE 2015. The share price of OKA peaked out at the range of RM 1.35 for 3 months, with the highest transacted at RM 1.38.
However, the current sell down in equity market could had opened up a new buying opportunity into this stock, especially for investor who had missed the previous run.
Whilst 2017 will be a difficult year, I continue to believe that OKA will be able to withstand such headwinds, underpinned by strong local demand from local infrastructure projects from MRTs to Highways. The latest inclusion of ECRL into the budget continue to underpin demand in precast concrete.
To
put a quick recap, OKA is unique from other precast concrete player due
to some of it's specialty products that are proven and acceptable in
the market. One of it is the "Porous Concrete Pipe" that is vital for
the development of highway and railroads.Beside that, new development of township that is sprouting in Malaysia will also put in demand for such pipes in use. This pipe is essential for land drainage because of it's ability to rapidly remove water by letting the water sipping through it's porous surface.
OKA continue to deliver increasing profit after tax for 5 consecutive years. One of the reason is due to the improving profit margin from due to savings in operation and inventory management.
Technical Outlook
Although OKA might had look bearish after breaking down from it's uptrend support line, the fall is attributable from an ex-date of dividend which at the same time saw major market sell down from the US presidential election.
Can OKA return to it's position at the range of RM 1.30 soon? Should the coming financial quarterly be satisfying and being able to deliver above EPS of 3 cents, OKA will definitely have a strong chance to rebound back to it's glorious form. Of course, based on it's past record, it is safe to assume that OKA can deliver for Q2 FYE 2017.
Given it's total dividend of 5 cents in 2016 and a solid performance, it is quite a good bargain to begin with at the current price range for OKA before it got swoop up by others.
Bone's TP : RM 1.30
OKA (7140) - OKA is shaken down for a good buy up
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