In QE30/4/2018, Superln's net profit dropped 63% q-o-q or 78% y-o-y to RM1.4 million while its revenue dropped 7% q-o-q or 22% y-o-y to RM25 million. Revenue dropped q-o-q mainly attributable to lower insulation sales volume and competitive pricing environment in the current quarter. The drop in the sales volume was mainly attributed to the fewer workdays resulting from festive holidays, weak local market sentiment prior to the Malaysian General Election and competitive global market. The competitive pricing environment, lower sales volume, coupled with higher cost in production resulting from installation and commissioning of machinery in the production process led to the group registering profit before tax of RM1.4 million in the current quarter as compared to RM5 million in the preceding quarter. Profit after tax of the Group has decreased by RM2.3 million to RM1.4 million as compared to preceding quarter.
Table: Superln's last 8 quarters' results
Graph: Superln's last 21 quarters' results
Superln (closed at RM1.52 yesterday) is now trading at a trailing PER of 20x (based on last 4 quarters' EPS of 7.7 sen). At this PER, Superln is deemed fully valued.
Superln peaked in August 2017 and went into a steady decline that's captured by the downtrend line, RR. That decline caused the stock to break its long-term uptrend line, SS at RM1.65 in March. In May, the continuous price decline has formed a bottom when the share price managed to climb back above the intermediate downtrend line, RR. From here, Superln will form a base to launch its next upleg. Until then, it is likely to move sideways.
Chart: Superln's weekly chart as at Jun 21, 2018 (Source: Malaysiastock.biz)
Based on weaker financial performance and mildly negative technical outlook, Superln is rated as a SELL until earning has improved or technical outlook has changed.
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