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Wednesday, June 21, 2017

Superln: Earnings Remained Healthy

Result Update

In QE30/4/2017, Superln's net profit rose by 2% q-o-q or 72% y-o-y to RM6.4 million while its revenue rose by 26% q-o-q or 37% y-o-y to RM32.5 million. Revenue rose y-o-y due to increased revenue for both the manufacturing & trading divisions.

The manufacturing division recorded higher revenue of RM28.4 million (FY 2016 : RM22.2 million) due to higher sales volume while PBT rose to RM7.9 million (FY 2016 : RM4.9 million) mainly due to the increase in total gross profit generated from higher volume of sales and favourable exchange rate.

Revenue for the trading division of RM4.1 million (FY 2016 : RM1.4 million) was mainly due to the increased sales of copper pipes to local customers. As a result, that division PBT increased to RM0.2 million compared to RM0.01 million previously.


Table: Superln's last 8 quarters' results


Graph: Superln's last 17 quarters' results

Valuation

Superln (closed at RM1.92 yesterday) is now trading at a trailing PER of 13x (based on last 4 quarters' EPS of 14.94 sen). Based on an earning CAGR of 60% over the past 3 years, Superln's PEG ratio is only 0.2x. As per the notes to its accounts, the company plans to invest approximately USD 4 million for the expansion plans and is targeting for Factory 4 to commence production in the FY2019. The new factory would enable Superln to strengthen its presence and support its customers in Vietnam and neighboring countries. Hence, Superln will continue to be a growth stock trading at attractive earnings multiple.

Note: Superln has completed its 1-for-2 share split in early June. This exercise may explain the strong rally in the share price for the past 3 months. It is not unusual that the stock may consolidate its recent gain before it continues with its upward trajectory.

Technical Outlook

Superln is in an uptrend line, which accelerated after it broke above the line, AB at RM1.30-1.33.


Chart 1: Superln's weekly chart as at Jun 20, 2017 (Source: Shareinvestor.com)


Chart 2: Superln's monthly chart as at Jun 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, Superln could be a good stock for trading BUY.long-term investment. If you want to get into this stock, I think any price below RM2.00 will be a good entry.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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