$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD): An Undervalued Stock?

On February 22nd, a company released its quarterly report that may not be well-known due to its low market capitalization and profile. This company is $LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD), a manufacturer of galvanized steel poles and masts in Malaysia. As of the closing price on February 23rd, the company's market capitalization stood at RM102.3 million. The latest Q4FY23 report shows the company achieving a new high record in net profit over 8 quarters, also marking the highest revenue and profit in the past 5 years.

1. Financial Performance
- Revenue reached RM23.3 million, a 46.22% increase year-over-year (YoY).
- Gross profit stood at RM6.61 million, showing a 50.03% YoY increase.
- Profit Before Tax (PBT) amounted to RM4.1 million, a 53.72% YoY increase.
- Profit After Tax (PAT) reached RM3.23 million, marking a 72.47% YoY increase due to higher Average Selling Price (ASP) of standard poles.
- Net Profit Margin stood at 13.85%, higher than the 11.74% in Q4FY22.

2. Balance Sheet Strength
- The company boasts total assets of RM186.21 million and total liabilities of only RM6.67 million, indicating a very healthy position.
- Notably, the company's cash position is strong, with RM94.94 million in cash and no borrowings. This cash represents about 92.8% of its market capitalization, translating to a cash per share of approximately RM2.28.

3. Cash Flow
- A positive free cash flow of RM15.77 million was reported.

4. Conclusion
- Upon considering the cash per share and EPS, the basic calculation suggests that the current share price may adequately reflect the company's value. The company achieved an EPS of 27.05 sen in FY23 and when adding with the cash per share, totaling RM2.55, which is a 3.66% discount of current share price. However, further research and calculations are necessary to determine the intrinsic value of the company.
- Despite these positive aspects, there are a few drawbacks to consider. The low trading volume and market cap are notable, along with a low dividend yield of 1.22% for FY23. Although the dividend payout remained the same as FY22 at RM0.03 but there is decreased in payout ratio. Additionally, volatility in commodities and crude oil prices could impact the company's margins.