LB Aluminium Bhd is slowly building its businesses to greater heights.

LB Aluminium Bhd could surge higher on the back of indicators unwind from the oversold position. LB Aluminium is the largest supplier of aluminium extrusion products in Malaysia and one of the largest aluminium extrusion manufacturers in South-East Asia,

The company had been consistently profitable in the past 5 financial years. Net profit increased from RM3.8 million in FYApr20 to RM41.7 million in FYApr22, but fell to RM29.3 million in FYApr24.

It posted a 24% year-on-year decline in net profit to RM29.3 million in FYApr24. Luckily, that was followed by a 105% y-o-y jump in quarterly net earnings in 1QFY25.

Revenue was at its highest in two decades, underpinned by stronger contributions from both its aluminium and property businesses. It made a net profit of RM8.86 million for in 1QFY25, up from RM4.32 million a year in 1QFY2024.

Revenue jumped 35.9% to RM279.76 million from RM205.86 million, with topline from its aluminium business rising 23% to RM184.9 million from RM150.3 million. Aluminium segment posted higher sales volume and selling prices, while its property segment's revenue rose to RM94.9 million from RM55.6 million.

The company saw higher sales and construction progress from its Satu Anggota Satu Rumah (SASaR) project and the PSV 1 Residences @ Platinum South Valley in Bandar Tasik Selatan, Kuala Lumpur.

In terms of Price / Book Value rating, the shares are currently trading at a multiple of 0.53x based on its book value per share of 96 sen as of end-Jul 2024. The company consistently paid dividends every year over the past 5 financial years. The payout ratio decreased from 64.6% in FYApr20 to 37.2% in FYApr24.

In the trailing twelve months, the company paid 2.5 sen in dividends, equivalent to a dividend payout ratio of 32.2% and offering a dividend yield of 5% at the current share price.

Going ahead, the company expects the strengthening of the ringgit against the greenback will lower input costs for aluminium billets. The billets are purchased mainly in US dollars, though sales revenue may be impacted as its sales are primarily priced in the same currency.

Additionally, global aluminium prices remain volatile due to uncertainties in trade policy, LB Aluminium pointed out.

On the property front, LB Aluminium anticipates that both the SASaR and PSV 1 Residences will continue to contribute positively as sales and construction progress increase.

Investors may find LB Aluminium attractive given its undemanding valuations and should trend higher moving forward.