Investor on the Street

Why is PLABS undervalued?

Publish date: Sat, 28 May 2022, 11:03 PM

PLABS is a ACE Market company which is in the Consumer Products segment. 

It is a low-profile company that many of us have not heard of. 

Its business is in manufacturing, distribution & trading of animal health & nutrition products. 


Is PLABS selling at cheap price now?


1. Share price you pay now is less than Net Asset per share. 

PLABS' share price is RM 0.195, whilst its net assets is RM 0.26.


2. Business has improved but not reflected in share price.

PLABS' revenue surged to highest in many years. Net profit also swelled. Share price did not.


3. Cash generated declined despite increased revenue and profits. 

This may explain the greatest concern on PLABS. Cash generated from operations is on downtrend on year-on-year basis since 31 December 2020 quarter, even negative cashflow in recentmost quarter. 


4. Executive Director using own money to buy shares.

Executive Director Miss Yap Siaw Peng had purchased shares from open market from RM 0.21. Usually, this is a vote of confidence that the company is undervalued.


5. Low Publicity.

PLABS is not a heavily-promoted stock. See how many bloggers & analysts mention PLABS. How many interviews are with PLABS management?


If the financially distressed customers can pay back PLABS as explained in latest Annual Report, then the cashflow concerns is no issue.

PLABS holds a proud record of never suffering a loss in any quarter since 2012, similar to OPENSYS & MAGNI. (Data from this website & Bursa Malaysia) 

I don't have shares in PLABS. Looking forward to buy if its cashflow improves. 


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