For QE31/12/2011, SEG's net profit increased by 51% y-o-y but declined by 3% q-o-q to RM17.7 million. Its turnover increased by 25% y-o-y or 1% q-o-q to RM70.6 million.
Table: SEG's last 8 quarterly results
Chart 1: SEG's last 20 quarterly results
Valuation
SEG (closed at RM1.89 today) is now trading at a PE of 14.4 times (based on last 4 quarter's EPS of 13.15 sen). Given its strong earning growth of more than 100% over the past 3 years, SEG's PEG ratio is very low, at less than 0.2 time. However, we cannot assume SEG will continue with this fast pace of growth forever. Even at a reduced rate (say, 30%), SEG's PEG ratio would come in at only 0.5 time. As such, SEG is deemed very attractive.
Technical Outlook
SEG has been moving sideway for the past 10-11 moths. Its immediate resistance is the horizontal line at RM2.00.
Chart 2: SEG's weekly chart as at Feb 28, 2012 (Source: Quickcharts)
Conclusion
Based on satisfactory financial performance & attractive valuation, SEG is considered a good stock for long-term investment.
Segi has been slipping since this post and is now trading at 1.77.
ReplyDeleteDo you forsee a change in trend or does the fundamental valuation still holds?
Hi Kevin Soon
ReplyDeleteSEG has been trading within a range of RM1.60 & RM2.00 for nearly a year. After such a long spell of sideway movement, the underlying bullishness has completely dissipated.
We have to wait for a breakout to show us the next price direction. If it can break above RM2.00, the stock will go higher. On the other, if it break below RM1.60, the stock will go down.
Based on EPS of 14 sen for FY Dec2011, SEG is trading at a PE of 13 times. For the top education group in Malaysia, I think SEG may command a higher PE multiple than 13 times.
Based on the above, I would rate SEG a HOLD.