For Q31/12/2014, Success's net profit plunged to RM0.2 million from RM7.5 million achieved in the immediate preceding quarter (QE30/9/2014) or RM6.5 million recorded in the same quarter last year (QE31/12/2013). The sharp drop was attributed to Success incurred a net loss after tax due to mainly due to loss incurred in process equipment segment (which is carried on by its subsidiary, Seremban Engineering Bhd which reported a net loss due to cost over-run on a particular project). Adjusted for minority interest, Success's net profit attributable to its shareholders was RM0.2 million.
Table: Success's last 8 quarterly results
Chart 1: Success's last 31 quarterly results
Valuation
Success (closed at RM1.82 last Friday) is now trading at a PE of 8.7 times (based on past 4 quarters' EPS of 20.95 sen). Price to book is about 0.9 time (based on NTA p.s. of RM2.06 as at 31/12/2014). Success is deemed fairly valued.
Technical Outlook
Success is in a long-term uptrend, with support at RM1.25. I believe Success
Chart 2: Success's weekly chart as at Feb 27, 2015 (Source: ShareInvestor.com)
Conclusion
Despite a poorer set of financial results, Success is rated a good stock for long-term performance. It valuation is fairly reasonable and it has positive technical outlook.
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, Success.
3 comments:
Hi Alex,
Success has just announced a very poor quarter yesterday, yet again, and the cost over-run of an SEB project in Sabah is the culprit since the previous quarter.
Since the announcement of its previous quarter result, the share price was beaten down quite substantially.
I averaged down my investment in Success when the share price was hovering at around 1.60 in the past 3 months with nearly all my remaining available capital. My reasoning to do this :
1.) I always think that Success is a rather well-managed company and LED
2.) Its share price is undervalued
3.) SEB's cost over-run is a one-time shock
However, my confidence is kind of shaken from the its share performance recently.
I hope to learn from your experience as well as professional thoughts on this kind of situation. Should one average down if situation like this happens? And, what is your take on the likely development of its share price?
Thank you for your time!
Regards,
Frank.
Hi Frank,
Success is being dragged down by the substantial losses incurred by its 65%-owned subsidiary, Seremban Engineering Bhd (SEB) in the past two quarters. SEB explained that the losses was due to cost overruns. That's amazing because in just 2 quarters, SEB incurred LBT of RM22 million while, in normal time, its PBT was less than RM2 million a quarter. I think SEB owes the shareholders a proper explanation. Since SEB is controlled by Success, the latter is also duty-bound to explain how SEB could have made such a serious mistake. The 2 quarters of losses wiped out 19 sen from its NTA of 87 sen as at 31/12/2013.
Without a proper explanation, we can't make an intelligence decision on the stocks- SEB or Success. You can get that at the company's AGM (see below).
Chartwise, Success is still in a long-term uptrend line with support at RM1.35 while SEB is resting on the uptrend line that dates back to Sep 2011 (with support at RM0.48).
For shareholders of Success can attend its AGM on 24/6/2015 (2:00pm) at Perdana Ballroom, Bukit Jalil Golf and Country Resort, Jalan 3/155B Bukit Jalil, 57000 Kuala Lumpur. For more, go to:
http://www.bursamalaysia.com/market/listed-companies/company-announcements/4749101
For shareholders of SEB can attend its AGM on 24/6/2015 (10:30am) at Perdana Ballroom, Bukit Jalil Golf and Country Resort, Jalan 3/155B Bukit Jalil, 57000 Kuala Lumpur. For more, go to:
http://www.bursamalaysia.com/market/listed-companies/company-announcements/4749049
Hi Alex,
I agree that there should be more explanation as of why such a substantial loss incurred from a single project.
Just another question here. Is there any way to get the company to provide more details with regards to this doubt to ordinary shareholders like me besides having to wait for the AGM, which is 1 month away?
Thank you.
Regards,
Frank
Post a Comment