In QE31/7/2017, Superln's net profit dropped by 44% q-o-q or 42% y-o-y to RM3.6 million while its revenue dropped 19% q-o-q but rose 3% y-o-y to RM26 million. Revenue decreased q-o-q due to lower export demand and less favorable exchange rate movement. Profits dropped q-o-q mainly due to the decrease in total gross profit generated from lower volume of sales and higher cost of materials. The lower other income recorded and higher other operating expenses also contributed to decrease in net profit before tax.
Table: Superln's last 8 quarters' results
Graph: Superln's last 18 quarters' results
Superln (closed at RM2.76 yesterday) is now trading at a trailing PER of 20.7x (based on last 4 quarters' EPS of 13.36 sen). At this PER, Superln is deemed fairly valued.
Superln is in an uptrend since 2014. With the MACD hooked down, Superln is likely to consolidate its price gain.
Chart 1: Superln's weekly chart as at Sep 26, 2017 (Source: Malaysiastock.biz)
If we compare the share price movement & the profit trend, it appears that share price is running ahead of earning. Superln is likely to experience a price reversal unless earning quickly rebounds back. Unfortunately we will have to wait for the next quarterly result to find out whether this will happen.
Chart 2: Superln's weekly price chart and profits trend for the past 4 years
Based on weaker financial performance and substantial price rally, it is advisable to take some profit for your investment in Superln. Thus, I rate Superln as a SELL INTO STRENGTH.
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.