PWROOT ... May11

Power Root manufactures Ali Café instant 3-in-1 coffee beverage. The low-profile company’s single largest shareholder is Kooperasi Permodalan Felda (KPF), which holds a 20.03 % stake in the company.

Power Root’s share price has been subdued of late due to high raw material prices which impacted its margins. Its net assets per share stood at 60 sen as at Feb 28, 2011.

Industry observers say Power Root could be an attractive privatisation candidate due to its cheap valuations and cash-rich balance sheet, and the fact that 85% of its customers are members of KPF itself. Sole ownership of the business would enable KPF to exert more authority in how it wants to conduct its business, as well as utilise the company’s cash resources.
The beverage manufacturer has a strong balance sheet, with net cash of RM22.17 million or 7.4 sen per share. For the year ended Feb 28, 2011, the company’s net profit rose 20% to RM12.23 million, or 4.1 sen, while revenue increased 19.2% to RM182.44 million.