UKEM and TRT 2 choices as growth stocks.

PaulRen's picture
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Here is an original 'member only' article, first published on September 21 2009, and today October 5 '09  made available to all  registered users.

This week with the SET in a continued upward bias, seemingly feeding on itself I think hiding it out in the smaller caps’ make sense, as if/when the SET stumbles my view is these should hold up better.  For this week, I would focus on TRT and UKEM.

TRT (6.05) I reviewed enough and made it the first free article under the new

UKEM (0.76), I had mentioned when the price was in the high .50’s and then reiterated my buy view even while it soared into the mid .70’s, only to consolidate there since. No profit taking advocated.

I like UKEM because I have a good feeling there by mgt. They seem refreshingly progressive, smart and pro investors. I reviewed UKEM for you before and so won’t explain their business here again. 

UKEM has 120 employees and about 60 product lines, surely a full line of products. It’ been in existence for 28 years and has no debt. The company has a high barrier of entry, so its difficult for any competition to erode their solid business. 

Here is just jot down some of the key things:  Ester group of organic chemicals, 28% aromatics green solvents, no inventory problems/issues, new paints are coming with healthier solvents, titanium oxide is a potential new product with much potential and big profit margins (look out for any announcement on this).  The family now owns nearly 80%’s of the shares as it bought some blocks back when it dipped into the .40’s earlier this year. 

I think UKEM can earn about 60 mill Baht this year, vs. 47 mill. last year. This so represents about 0.10 per share, or a 2009 p/e of 7.5.  Not so cheap considering, but next year should see a continued profit rebound and likely some good announcements. Next year and assuming no other big set back, I can see UKEM above 1 Baht.

My view is to own the stock before the XW date which should be shortly after the September 30 board meeting, so to nail down on getting the warrants which will reportedly be convertible at 0.50 Baht per share and likely trade in November. For every 4 shares, one new free warrant will be issued.  The company states it does not really need the capital increase but realizes “investors ever value this and its good for the stock price”.

Best Regards,

Paul A. Renaud.