CLASSIC Scenic Bhd

The Edge FD Top Pick 2017

CLASSIC Scenic Bhd, the wooden picture frame manufacturer, is the classic dividend play for 2017 with its above market average dividend yield of about 7%, and might be the right defensive strategy amid the uncertain external environment.

Last year, its share price performance was impressive with a total return of 59.8%, closing at RM1.79 on the last trading day of 2016. What’s even more remarkable is that despite such an uptrend, its dividend yield for 2016 was above market average at 6.7%.

The group saw its revenue rise 22.7% year-on-year to RM14 million for the third quarter ended Sept 30, 2016, while net profit grew 87.5% to RM3.2 million. Its gross profit margin also rose to 43.9% from 38.2% a year ago.

The company is primarily involved in the manufacturing and export of high-end wooden picture framework mouldings and about 90% of its sales come from the export market, mainly to the US and is denominated in US dollars. The stronger US dollar has contributed to its improved financial results. Its net cash also saw a significant increase to RM28.7 million or 23.9 sen per share from RM21.4 million in 2015.

The company operates six manufacturing factories and is in the midst of building a new warehouse to improve its production efficiency and capacity.

InsiderAsia has noted some of the positive characteristics of Classic Scenic, such as its profitable niche market, owner-oriented management, high sustainable dividend yield and growth potential. — By Billy Toh