SKB Shutters

I commute using MRT to work since 2024.

Today, as usual, I go to MRT Jinjang Station as I need to work in my office near Kajang today. I reach the station quite early. As I am so bored there, I spend time wandering around the station, and I see this:

Baby changing room

There are plenty of fire-rated doors made by SKB around the MRT Jinjang station, including the staff room (customer service) room door, telecommunication riser room door, hose riser room door, fire exit doors and many others. Pls see below.

Fire Exit

AFC Equipment (for auto-ticketing gate control)

Telecommunication riser 

Customer Service Room

Hose Reel and Dry Riser

Surau

Retail shop

System riser

At MRT Kajang station, I saw the SKB-made roller shutter near a warung makan (next to KTM Kajang entrance). My daughter likes to purchase sweet corn from this warung when she follows me to my office. This roller shutter is located between the walkway from carpark to KTM Kajang (see below). By the way, KTM Kajang entrance is just next to MRT Kajang exit.

In fact, I have purchased small quantities of shares of SKB Shutters (SKBSHUT) last year (2 Oct 2025) around RM 0.9+ when it reported a record high Q4 FY2025 profit. Its PER during that time is < 10, and I believe this company should be sold at the level of 10x PER at least, considering its dividend yield of almost 7%. However, after I purchased the shares, the share price plummets, lol... 

Am I making a wrong investment decision?

Let us analyze this company fundamentally.

Business background

SKBSHUT is focusing on manufacturing fire-rated doors, metal doors (for data center, which drives high margin, 35% of revenue), racking system (20% - 23% of total revenue), roller shutters (35% of revenue), etc. The boss of this company, Mr. Sin, is a mechanical engineer graduated from Taiwan. He is a very innovative engineer and entrepreneur, holding many patents for his design of roller shutter and steel-related products.

SKBSHUT will soon operate in a new, larger factory in Puncak Alam. The company has allocated huge capex for this purpose in FY2025, see below:

I have found the fire doors made by this company in various MRT stations, including MRT Jinjang, MRT Kajang, Ikano Power Center. According to the Management, "the metal door in data center could drive even higher margin as these doors are quite special and need to follow certain specifications/requirements. According to the Management, there are several notable competitors in the region, including those from Germany, China, and Malaysia. Locally, while there are a handful of competitors, SKB is currently the largest in terms of scale." --> Quoted from the MoM FY2025

I believe the moat of this company is that it is able to produce products that can meet stringent safety and regulatory requirements. Mr. Sin is a forward looking entrepreneur (and capable engineer) and able to design products to cater for future needs. As quoted from their MoM 2025:

"Innovation is the key driver of SKB’s growth. A strong example is the Insulated Fire Shutter. Even before it was made compulsory, SKB had already undertaken nearly five years of R&D. It took time for the product to be tested and certified, but when the market eventually mandated its use, SKB was wellpositioned as a first mover with a competitive advantage."

"SKB was the first in the market to achieve an Insulated Fire Shutter, tested to provide four hours thermal insulation and four hours fire integrity in 2015. That year, SKB had already introduced the product to the market, which later proved advantageous when authorities made it compulsory. Since then, the market has had the option to choose between Uninsulated and Insulated Fire Shutters. In 2021, Insulated Fire Shutter became a mandatory requirement, and this was reflected positively in the Company’s financial results."

Financial background

Let us examine the financial aspect of this company.

By looking at the historical record of its profit trend, undoubtedly, it is a growing company. Except in FY 2020, the net profit has been increasing consistently especially from FY 2023 onwards. The most notable growth is in FY2025 as the company has recorded the highest profit margin of around 19% as SKB had a higher concentration of high-margin products in FY 2025.

I believe the main raw material of SKBSHUT is steel. So, the steel price is plotted in tandem with the gross profit margin. In general, the gross profit margin of SKBSHUT is quite consistent at the level of 20%-25% even during the surge of steel price in year 2021-2022. The recent gross profit margin surges to almost 40% as the steel price normalizes after its peak in 2021.

It is appealing to note that its ROE has been uptrending since FY 2017, and the company has achieved ROE of more than 12% since 2023.

The company has been generating positive operating cash flow since FY 2017, which is a good sign. However, huge capex are incurred in both FY 2017 and FY 2025. In FY 2017, the capex is allocated for the acquisition of land of the existing office and factory at Kota Damansara. In FY 2025, however, the capex is mainly for constructing the new plant in Puncak Alam which is expected to be ready between June-September 2026 (from the Minutes of Meeting 2025 AGM). The new plant is estimated to provide between 50% and 60% more than the current facility.

Despite huge capex in FY 2025, the company is able to generate free cash flow (FCF) per share of RM 0.07. In the same financial year, it has declared its dividend of RM 0.065.

Valuation

Despite its strong balance sheet and good business prospect, it is trading at single digit PER multiple. Have a look on the PER trend of SKBSHUT below. 

The reasons that I could think of are:

(1) Low liquidity: Most fund managers would avoid investing in company with low liquidity. Nevertheless, from its Annual Report 2025, there are a few funds that have invested in SKB, e.g. 

EPF (2.9 %), 

MANULIFE INVESTMENT SHARIAH PROGRESS PLUS FUND (0.326%), 

MANULIFE FLEXI INVEST FUND (0.254 %),  

PHEIM EMERGING COMPANIES BALANCED FUND (0.241 %). 

I believe these funds are holding the company for long-term. There are 73% of shares currently held by top 30 shareholders. 

(2) Inconsistent dividend payout: Currently, I guess the Management has been focusing on allocating budgets for running the new plant more than paying dividends to shareholders. The management did not declare any dividend in the most recent Q2 FY2026 quarter despite achieving good profit (unlike during Q2 FY2025 where 4 cents dividend was declared). A closer look into Q2 FY2026 reveals that the company FCF is negative currently because a huge capex of RM 26 M was allocated. Therefore, it is justified that no dividend is declared. I personally do not wish to see that a company borrows to pay dividend just to "please" the shareholders.

(3) Cyclic business (somewhat): Its end customers are mainly from construction sector, a cyclical industry.

If we simply take the most recent 5 year median/mean PER of SKB, it gives us the number 6.3. Multiplied 6.3 by the trailing 4Q EPS of RM 0.16, it gives us the fair value of SKB at RM 1.0 roughly.

For me, such a low PE multiple of 6.3 is really unjustified for such a solid and growing company (for me). There are many companies out there that are financially weaker than SKB and yet they are traded at significantly high PER just because of they are operating in a "hot and sexy" segment. But what to do, this is share market, short-term traders outnumbers long-term investors by a huge margin. Those short term traders would "vote" for those hot counters definitely as they could earn fast money within days.

As a conclusion, I do hope that the Management will reward shareholders once more profit is made by the company in the future. When that time comes, the Market would rerate this company at a higher PER.