This column was introduced to jumpstart the reader’s search for a multi-bagger. It was hoped that by probing into companies which had small market capitalization and were unnoticed by the public, gems could be uncovered. To date, 5 such companies have been introduced through this column and it is perhaps pertinent to revisit them to see how they have performed and whether their story has changed.

Asiatic Group (Holdings) graced the first Closer Look @ column. What we liked about it then was its positioning as an independent power player in Cambodia’s emerging economy. There have since been many significant developments in line with Asiatic’s strategy to expand in the power sector across the region.

In the middle of July, it tied up with the Vietnam Infrastructure Development and Finance Investment JSC and the HVD Construction and Investment Consultants JSC to jointly develop, design, build, own and operate a 44MW hydro-power project in Vietnam. In October, Asiatic took a 30% stake worth RM10m in a JV in Malaysia to construct, operate and maintain a power plant which can convert oil palm fruit bunches into energy.

The market seems to have digested these developments positively, as Asiatic’s share price has since risen more than 50% on thin volumes. Nonetheless, Asiatic remains significantly leveraged due to the nature of its operations, despite net gearing improving to 1.40 against the previous period’s 1.55.

Market Darling
While it might be stretching definitions to say that Sinotel Technologies is a thinly traded counter, the writers felt obliged to feature the network infrastructure and support solutions company, as it might have been unfairly associated with S-Chip corporate mis-governance.

Readers who have followed through on their interest in Sinotel have been handsomely rewarded. Share price close to doubled since then, after the company announced that it was going to establish an American Deposit Receipt (ADR) facility in the US.

Sinotel reported a 52% increase in earnings for its recently announced 3Q09 results. Revenue for 3Q09 rose a stellar 57.9% to Rmb136.2m on the back of increasing demand for its Wireless Network Solutions amidst the industry wide 3G wireless mobile network upgrade.

Executive Chairman Jia Yue Ting said, “China’s 3G rollout has been progressing well with most of the key cities now 3G capable. We anticipate that the next stage of development would be to increase the capacity of the new network and broaden its coverage to smaller cities.”

Sinotel will also look towards securing a market maker for its ADRs in the US in the months ahead. Once the approval is received, that market maker will have a 30 day exclusive period. After that period, Sinotel’s Singapore shares can be purchased by any market maker and converted into ADRs.

Comme Ci, Comme Ça
Etika International Holdings, the latest to feature in the column, has also seen its share price appreciate after posting earnings in line with analysts’ estimates and proposing a handsome final dividend of $0.02.

The manufacturer and distributor of sweetened condensed milk reported a strong set of FY09 results with attributable profit surging 51.5% to a record RM61.5m on the back of RM600.6m in revenue which increased 1.4%. Lower average net selling prices in both domestic and export markets negated the 16.9% increase in sales volume for Etika’s dairies products. But margins burgeoned due to the lower per unit costs stemming from manufacturing economies of scale.

Going forward, Etika expects to see increases in the price of skimmed milk powder, tin plates, sugar and CPO in line with the global economy. Nonetheless, Etika hopes to mitigate the impact on margins by seeking out new markets in Indochina and Indonesia, where it has established a presence during FY09. NRA Capital and CIMB maintained their “Buy” ratings on Etika but raised TP to $0.50 from $0.28 and $0.615 from $0.43 respectively.

Leeden and Elite KSB Holdings however have not been able to share the same fortune. Both stocks’ share price have barely budged and remain thinly traded. Share buy-backs and open market purchases by Leeden’s directors formed bulk of Leeden’s trading activity. Elite KSB experienced a brief bout of activity as investors bought into the company for its attractive $0.01 final dividend, which approximates to a gross yield of 5% base on average transacted price.

Nonetheless, both companies’ fundamentals remain well grounded and have been quietly improving their operations. Leeden’s brand building within the Southeast Asia region brought it to Indonesia in October, where it participated in “Oil & Gas Indonesia 2009”.

Although Leeden’s products and services are widely used by shipyards for repair and new builds in Batam, the oil producing market closer to Jakarta remains relatively untapped. With the strong Indonesian government support for the oil producing industry, the company sees a good opportunity to grow its presence in the country.

Elite KSB on the other hand expects a higher contribution from recently acquired Jordon International Food Processing, as it would be incorporating its full year performance into FY10. The 5 months of Jordon’s revenue which were consolidated into Elite KSB’s FY09 account amounted to $17m or 27% of FY09 turnover. With efforts to streamline Jordon’s processes and improve operational efficiency underway, earnings look to reach a higher bar.