Monday, July 01, 2013

SCGM- time to take some profit


Result Update

For QE30/4/2013, SCGM's net profit increased 33% q-o-q or 29% y-o-y to RM1.8 million while revenue dropped 13% q-o-q but rose 3% y-o-y to RM23 million. Bottom-line increased q-o-q due to higher margin which resulted from product sale price increase coupled with the consistent production efficiency & stable input cost, such as labor cost and raw materials cost (which was brought about by decline in commodities prices).


Table: SCGM's last 8 quarterly results


Chart 1: SCGM's last 17 quarterly results

Valuation

SCGM (closed at RM1.10 last Friday) is now trading at a PE of 11.5 times (based on last 4 quarters' EPS of 9.6 sen). For a small-cap stock, SCGM is deemed full valued.

Technical Outlook

SCGM broke above its intermediate downtrend line at RM0.70 in early June and shot up to close at RM1.10 last Friday. The sharp rise will only be sustainable if there is some exciting development ahead. Even if that were the case, the sharply higher prices may have factored in all the good news into the share price.


Chart 2: SCGM's weekly chart as at July 1, 2013_11.45am (Source: quickcharts)

Conclusion

Despite good financial performance, SCGM's recent sharp rise in share price has now put the stock at a demanding valuation. As such, I would revise my rating to TRADING SELL.

Note:
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, SCGM.

8 comments:

dukuhead said...

Dear Alex,
Can you give me your considered opinion on whether V S Industry Berhad (ticker: "VS"; stock code 6963) is now a good buy? Appreciate your input on this.

Billy Teo said...

Hi Alex,

Finally YEELEE broke 1.26 in style.

Hope to see further upside and your target price of 1.70.

Rgds

Anonymous said...

hi Alex-I took your cue when u last wrote on 18.12.12 at around 59 cents.Got in and 2day it hit 110.2moro i will exit.what do u think?TQ

Alex Lu said...

hi charles leong

Well done!

Alex Lu said...

hi Billy Teo

Its next stop: RM1.50.

Alex Lu said...

hi dukuhead

If you are a contrarian, you should keep a close watch on VS. The poor result has brought the share price to the present low level. Its losses seems to stabilizing albeit recovery has yet to begin.

Technically speaking, the stock is mildly bearish. It has broken below its long-term uptrend line at RM1.30. it is also broken below its recent low of RM1.27 [recorded in early May]. The danger is that it may start to slide off quickly to the next support at RM1.05-1.10. If that level is also violated, its subsequent support would be RM0.95-1.00.

I would prefer to wait for a rebound in the earning before committing.

dukuhead said...

Thanks very much for your analysis of VS Industry Berhad, Alex, much obliged.

Billy Teo said...

Good