Scientex- bottom-line improved

Result Update

Yesterday, Scientex announced its results for QE31/1/2013. Its net profit increased by 3% q-o-q or 27% y-o-y to RM25.6 million while its revenue increased by 12% q-o-q or 26% y-o-y to RM271 million. The improved bottom-line on a q-o-q basis was attributable to one-month contribution from the newly-acquired manufacturing businesses of GW Plastic & GW Packaging.


Table: Scientex's last 8 quarterly results


Chart 1: Scientex's last 30 quarterly results

Valuation

Scientex (at RM3.90 as at 10.30am) is now trading at a PE of 9 times (based on last 4 quarters' EPS of 43.53 sen). Its PEG ratio is about 0.6 time, since the earning grew at 14-16% over the past 2 years. At this CAGR, Scientex may command a PE of 12 times or a fair price of RM5.20.

Technical Outlook

The stock is in an uptrend. Last week, it broke above r2-r2, the line connecting the high over the past 2 years. The previous breakout of a similar line (R-r1), the stock rose from RM1.95 to RM2.70. I expect the stock to rise steady to test the line, RR which connect the peak over the past 4 years. If that pans out, this stock's medium-term resistance would be RM4.50-4.70.


Chart 2: Scientex's weekly chart as at Mar 27, 2013_10.30am (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & positive techncial outlook, Scientex is a good stock for medium to long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Scientex.