Can CEKD go higher after touching a high of 56 sen?

CEKD Bhd is seen as a laggard among its peers but has seen a positive move upwards. The die-cutting solutions provider broke the resistance of 55 sen and extended its rally to touch a 52-week high of 56 sen. Prices also closed at its month-high on a close basis, underpinned by a higher trading volume.

The counter has gained some 13.3% year-to-date to close at 51 sen on July 26. It was trading at a low of 42 sen last December, lower than its listing price of 48 sen. The company was listed on the ACE Market in September 2021. CEKD has recovered and moved up since then.

For the third quarter ended May 31, 2024, the company posted marginally higher net profit of RM1.8 million from RM1.7 million a year ago. This was on the back of higher revenue of RM9.1 million versus RM8.4 million. On a 9-month basis, its net profit rose to RM4.9 million from RM3.7 million a year ago on the back of increased revenue of RM26.3 million versus RM24.4 million.

Moving forward, the company says it continues to enforce efficiency optimisation and stringent cost management. Its gross profit margin is returning to historical levels. The reduction of our loans and borrowings in 2Q2024 has also positively impacted its net profit margin. Additionally, there are opportunities to widen the distribution network and enhance synergy through marketing and production.

This is following its acquisitions of Worldwide Die Cutting Mould Sdn Bhd and Kit Technology Sdn Bhd. Its diversified product portfolio allows it to adapt to evolving market needs. The company says it actively seeks opportunities to expand its business inorganically and organically. Inorganically, CEKD targets acquisitions that align with its core competencies. Organically, it pursues international expansion by actively engaging with customers and conducting marketing activities on a global scale.

It will be interesting to see how high the counter go especially given that its financial results were not great but probably will ride on business expansion activities.