In QE31/72018, SCGM's net profit rose 6 folds q-o-q on the back of a 16%-increase in revenue to RM56 million. When compared to same quarter last year, net profit dropped 81% while revenue rose 4%. Revenue increased q-o-q, mainly due to higher sales from local and overseas markets. PBT rose q-o-q in line with higher revenue achieved for the current quarter. PBT dropped y-o-y due to higher resin prices, higher finance costs, higher electricity costs, higher depreciation charges, higher labor cost and foreign exchange losses incurred
Table: SCGM's last 8 quarterly results
Graph: SCGM's last 38 quarterly results
SCGM's financial position is deemed adequate with current ratio at 1.25 times while gearing ratio is elevated at 0.96 time.
SCGM (closed at RM1.42 yesterday) is now trading at a PE of 23X (based on last 4 quarters' EPS of 6.16 sen). At this PE, SCGM is deemed fully valued. However, PE will improve once earning starts to increase.
After a steady decline, SCGM seems to have found support at RM1.30-1.40.
Chart: SCGM's weekly chart as at Sep 20, 2018 (Source: Malaysiastock.biz)
Based on tentative recovery in earnings, adequate financial position and possible bottoming of the share price, vised my rating for SCGM from a SELL to a HOLD.
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