Highlights

LKL International Berhad

Author: Patrick TheBull   |   Latest post: Sun, 10 Nov 2019, 10:25 PM

 

LKL International Berhad - The Hidden Star in the Healthcare Sector

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Today I am going to highlight a potential future star in healthcare industry. This company called LKL International Berhad (LKL).

LKL is Malaysia leading medical/healthcare beds, peripherals and accessories provider to numerous public and private hospitals and medical centres in Malaysia (82.28%) and exported to over 30 countries (17.72%).

FY 2019 has been a tough year for every businesses, including LKL as well. However, what impressed me is that they are a net cash company yet still can position themselves for a growth through cost management (even though gross profit dropped YoY) and expanding business through numerous strategic steps such as:

  1. invested in new manufacturing facilities by building a new four-story steel structure extension and increase the total built-up area of the manufacturing plants from 91,740 sq ft to 129,140 sq ft (expected to be operational in the 3rd Quarter of the financial year ending April 30, 2021 to boost their capacity and capabilities to scale up their production line with future demand);
  2. incorporated new medical devices and medical peripherals;
  3. added a host of products including nursing call systems from Alexys Australia, hospital digital solutions and monitoring systems from Melten Taiwan, as well as the Breathair ® mattress from Toyobo Japan, cleanroom solutions from Dagard France, air purifier systems from Aerus USA and BenQ Medical Technology Corporation’s products, namely ultrasound system, surgical light and surgical tables;
  4. added healthcare operating systems to enable their customers to integrate advanced technologies into their operations for increased efficiency;
  5. deploy solar technology for their medical equipment and they have earmarked RM 500,000 for this technology; and
  6. extended their presence in new and existing target markets by actively participating conferences and exhibitions.

On top of that, the total number of shares outstanding in this company is 428.8 million. There are 4 substantial shareholders as per Annual Report 2019. Lim Kon Lian, Mok Mei Lan and their children, Elaine Lim Sin Yee and Lim Pak Hong hold 70.73% of shares in the company, the effective float is at 29.27% as it is most likely that the family would retain their shareholdings in the company. This indicate that any positive catalyst will move the share price upward quickly. Do note that, they are supporting and buying the shares all the way when the share price is on a downtrend.

From the technical point of view, the share prices had broken out from 31 months downtrend. Please be informed that, 31 October 2019 (mark-up date) was the day after AGM held in Bangi Resort Hotel. I believe ‘something’ had been discussed and shared during the Q&A and press release sections. In addition, the price currently stay strong above 11.5sen (38.2% fibo retracement). I believe the share price are trying to test 12.5 & 13sen in the following trading days and breakout from 15.5sen to form minor wave 3. Wave 3 usually is the largest and most powerful wave in a trend. Besides, the share price is standing above 200-moving average, MACD is at upper golden cross (8 days) and RSI is greater than 60%.

Yesterday, I am reading some research reports regarding to the density of hospital beds (bed-to-population ratio) in Malaysia lagged behind the international standards and the percentage of Malaysian population reaching over 60 years old will keep increasing (increasing trend of the ageing demography). I believe that LKL is evolving themselves to a high value medical supply company with the incorporation of new medical devices and medical peripherals covering the whole spectrum of the industry. Moreover, with the current medical inflation and the constant demand for more hospitals and clinics (require more medical/ healthcare beds, equipment, peripherals and accessories), I believe that share price had bottomed out, immediate resistance and support at 15.5sen and 11.5sen, respectively. Risk and reward ratio is about 1 to 5. I believe LKL is a hidden star in healthcare sector (just like I notice GDB on Jan 2019) and both of them have the same characteristics which have so much room to grow and potential to be a future star in the long term.

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Labels: LKL

Related Stocks

Chart Stock Name Last Change Volume 
LKL 0.12 0.00 (0.00%) 10,000 

  4 people like this.
 
hotstock1975 Patrick Thebull, allow me to share my wave counts which is slighly different from yours. Wave 2 started on 10/23 and Wave 3 ended on 10/31. Well, Wave 4 is ending around currently level at 0.115 after retracement of 61.8%. Expecting a weak Wave 5 travel back up to 0.14 with a weak PTI at current setup. A fail wave 5 may emerged.
11/11/2019 12:37 AM
uncle ykk Go go go lkl
12/11/2019 9:18 AM
BenPg LKL Will test 15.5 tomorrow. Go man go !!!!
12/11/2019 7:05 PM


 

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