Luxchem, High Dividend Yield Stock & Fair Value/Target Price

Luxchem Corporation

Luxchem Corporation Berhad was incorporated on 4 September 1991. It was listed in Bursa Malaysia Main Market on 27th June 2008 at an IPO price of RM1.10. The shares price drop to below 60 sen in the same year but start to recover in 2009.

The main activities of Luxchem are manufacturing and trading of unsaturated polyester resin and related products. They are also involved in importation and distribution of chemical and pertochemical products. Three of Luxchem’s subsidiaries are ISO9001:2000 certified.

Unfortunately, there is no coverage by research house on Luxchem for the latest Fair Value/Target Price. The last done was from CIMB Retail Research in July 2010 whose make a sell recommendation with a target price of RM1.15.

When compare to FBM KLCI, Luxchem shares price are really lagging. In 2010, FBM KLCI move from 1200 to almost 1600 points, but Luxchem share prices stay in the range of RM1.03 to RM1.20.

However, on the positive side, Luxchem is paying a very good dividend since it was listed in 2008. For the past 3 years, the dividend yield stays above 7% which is more than double of the current fixed deposit rate. Furthermore, Luxchem has a low PE ratio.

The table below is the financial summary of Luxchem  for the past 3 years.

2008 2009 2010
Revenue (‘000) 331,469 305,308 399,823
Net Profit (‘000) 17,821 18,971 20,483
PE Ratio (x) 4.52 7.20 6.66
EPS (sen) 13.71 14.60 15.76
Dividend (sen) 5 8 8
Dividend Yield (%) * 8.06 7.62 7.62

*Based on price on last trading day of the year

On 30th March 2011, Luxchem share prices close at RM1.12. They declare 5 sen final dividend with an ex-date  of 7th June 2011. At last trading price, the dividend yield still maintain above 7%.

I’m partnering with “Kampung Investor” and Thomas in accumulating Luxchem shares. Anybody would like to join? Anyway, buy at your own risk!

5 comments… add one
  • Sold all my 3200 shares d brother. Made some losses but i shall return later.. 🙂

  • I’ve sold all mine too at break even when considering dividend. I sell it at RM1.03 sometimes in August. Will buy again later.

  • Sir,

    TQ for the info, i personally like high div yield stocks, especially stocks that have similar or higher than asb div… vy keen to buy at lower price. Appreciate if u could share more on these kind of stocks. Thanks.

  • kingjoke, sure I will share more in the future.

  • Dear Sir, May I seek your advice on this stock price movement? Lately moving up slowly. Fyi, I have 5000 shares since IPO.


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