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Sunday, June 24, 2018

SCGM: Earning Plummeted

Results Update

In QE30/4/2018, SCGM's net profit plunged 97% q-o-q and y-o-y to RM150k while revenue dropped 10% q-o-q or 9% y-o-y to RM48 million. Revenue dropped q-o-q mainly due to lower sales from local and overseas customers which was affected by holidays during the current quarter and strengthening of Ringgit Malaysia against major foreign currencies. PBT dropped sharply q-o-q mainly due to higher resin prices, higher finance costs, higher depreciation charges, higher labour cost and foreign exchange losses incurred during the current quarter.

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 37 quarterly results

Valuation

SCGM (closed at RM1.81 last Friday) is now trading at a PE of 19X (based on last 4 quarters' EPS of 9.46  sen). Share price will have to go lower to reflect the plummeting earning.

Technical Outlook

SCGM broke its long-term uptrend line, SS with support at RM2.90 in October 2017.


Chart 1: SCGM's monthly chart as at Jun 22, 2018 (Source: Shareinvestor.com)

In the past 3 months, SCGM has rallied to test its downtrend line, RR. With this exceedingly poor financial performance, a breakout of thsi downtrend line is unlikely to happen next few months.


Chart 2: SCGM's daily chart as at Jun 22, 2018 (Source: Shareinvestor.com)

Conclusion

Based on poor financial performance & bearish technical outlook, SCGM is rated a SELL.

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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