Monday, May 20, 2013
SEG- a short respite?
For QE31/3/2013, SEG reported a net profit of RM1.2 million- a turnaround from a net loss of RM2.8 million for QE31/12/2012 but nevertheless a 95%-drop from a net profit of RM27 million a year ago. Revenue increased by 6% q-o-q but dropped 28% y-o-y to RM56 million.
The turnaround in the bottom-line was a result of improved recruitment which led to increased revenue. Nevertheless, this is a far cry from the days of consistent growth which made SEG a darling among the mid-cap stocks on our exchange.
Table: SEG's last 8 quarterly results
Chart 1: SEG's last 20 quarterly results
SEG (closed at RM1.63 last Friday) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 6.6 sen). SEG is clearly overvalued and this overvaluation can be rectified in one of two ways- a rise in earning or a drop in share price. Only time will tell which scenario will pan out.
SEG is now resting at its support at RM1.60-1.65. A downside breakout of that suppotr would send the stock to the next horizontal support at RM1.25 & then at the psychological RM1.00 mark. Its warrant is similarly hanging onto its support at RM1.08. Its next support would be the psychological RM1.00 amrk & then the horizontal line at RM0.80.
Chart 2: SEG's weekly chart as at May 17, 2013 (Source: quickcharts)
Chart 3: SEG-WA's weekly chart as at May 17, 2013 (Source: quickcharts)
Despite the improved financial performance, SEG is still not out of the wood. Its earning needs to bound back strongly or else the share price would have to adjust lower. As such, SEG is rated as REDUCE or AVOID for now.
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, SEG.