Thursday, March 28, 2013

Scientex- bottom-line improved

Result Update

Yesterday, Scientex announced its results for QE31/1/2013. Its net profit increased by 3% q-o-q or 27% y-o-y to RM25.6 million while its revenue increased by 12% q-o-q or 26% y-o-y to RM271 million. The improved bottom-line on a q-o-q basis was attributable to one-month contribution from the newly-acquired manufacturing businesses of GW Plastic & GW Packaging.

Table: Scientex's last 8 quarterly results

Chart 1: Scientex's last 30 quarterly results


Scientex (at RM3.90 as at 10.30am) is now trading at a PE of 9 times (based on last 4 quarters' EPS of 43.53 sen). Its PEG ratio is about 0.6 time, since the earning grew at 14-16% over the past 2 years. At this CAGR, Scientex may command a PE of 12 times or a fair price of RM5.20.

Technical Outlook

The stock is in an uptrend. Last week, it broke above r2-r2, the line connecting the high over the past 2 years. The previous breakout of a similar line (R-r1), the stock rose from RM1.95 to RM2.70. I expect the stock to rise steady to test the line, RR which connect the peak over the past 4 years. If that pans out, this stock's medium-term resistance would be RM4.50-4.70.

Chart 2: Scientex's weekly chart as at Mar 27, 2013_10.30am (Source: Quickcharts)


Based on good financial performance, attractive valuation & positive techncial outlook, Scientex is a good stock for medium to long-term investment.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Scientex.


Stephanie said...

Hi Alex

Would appreciate your comment on MHB. Is it worth to buy for mid to long term at RM3.78 ~ RM3.80 . Thanks.

Alex Lu said...

Hi Stephanie

MHB has dropped below its RM4.20 support. The breakout of that support (which was its early low right after its listing) is very bearish.

For now, it is best to avoid the stock.