I've posted on Megan twice in August 2006 (here & here). The group is involved in the manufacture & sale of CDs, DVDs & video tapes. Its recent financial performance was affected by intense competition from manufacturers in China & Taiwan.
Recent Financial Results
However, we can see that the group's net profit has increased in QE31/10/06 by 12.8% q-o-q to RM15.2 mil from RM13.4 mil in QE31/7/06. This was achieved on the back of a marginal 3.5% increase in turnover from RM230 mil to RM238 mil. Its EPS has also increased from 6.6 sen to 7.5 sen during the period. As such, its first half 2007 EPS amounts to 14.0 sen.
Valuation
Based on yesterday's closing price of RM0.66 & an annualized EPS of 28 sen, Megan is now trading at a PE of 2.4 times. This is a cheap stock that has factored in a lot of risks.
Technical Outlook
Technically, the stock is still in a bottoming-out process. A breakout may be at hand since the share closed at RM0.66 level, yesterday. This level was however surpassed once in end November & early December last year but it failed at the RM0.70 level. I think a break above RM0.70 is required to convince technicians about the stock's upside potential.
Chart 1: Megan's daily chart as at Jan 3, 2007
Chart 2: Megan's weekly chart as at Jan 3, 2007
Conclusion
Based on cheap valuation & potential technical breakout, Megan is a stock worth tracking or even buying at current level.
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