Monday, February 16, 2015

Sign: An attractive stock

Background

Signature International Bhd ('Sign') is involved in the design, manufacture and retail of kitchen and wardrobe systems segment, marketing and distribution of white goods segment, and manufacture of glass and aluminum products segment.

Recent Financial Results

From the Chart 1 below, we can see that Sign's top-line and bottom-line have been trending higher since QE30/6/2011. Its profit margin is also rising- a very healthy sign.


Table: Sign's last 8 quarterly results

 
Chart 1: Sign's last 28 quarterly results

Valuation

Sign (closed at RM1.80 on Friday) is now trading at a trailing PE of 6.7 times (based on last 4 quarters' EPS of 26.7 sen). It is trading at a PB of 1.5 times (based on NTA of RM1.17 per share as at
31/12/2014). Based on PER & PB, Sign is deemed fairly attractive.

Technical Outlook

Sign is in an uptrend since 2012. Its immediate support is at the horizontal line of RM1.70. That coincides with the 10-month SMA line.


Chart 2: Sign's monthly chart as at Feb 13, 2015 (Source: ShareInvestor.com)

(Updated) I have appended below Sign's monthly chart adjusted for the 1-for-2 Bonus in July 2010. The stock has just broken to a new high.


Chart 3: Sign's monthly chart as at Feb 16, 2015_9.35am (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation & positive technical outlook, Sign is rated a good stock for 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,Sign.

8 comments:

lai said...

Hi Alex,

Good to see u in Focus mag. May the year of Goat bless us all

martinkakashi said...

Hi Alex,

Can you comment on Bjcorp and Ibhd

Unknown said...

How about its debt.?

Alex Lu said...

Hi Lai,

Thank you.

Alex Lu said...

Hi martinkakashi

Bjcorp is in a downtrend but it is at the strong support of ~RM0.40. Similarly, Ibhd had a sharp fall and is resting on the support of RM0.60.

If market sentiment improves, these stocks should hold at their current price level. Recovery may take a while.

Alex Lu said...

Hi darren cheng

Sign's leverage position is satisfactory. As at 31/12/2014, its Total Liabilities to Total Equity (RM78.5m/RM144.0m) is 0.55 time.

ronnie said...

Gong Xi Fatt Cai, Alex.

You are right. Signature has the potential to blossom into a billion ringgit company. I love their products (good design and finishing) and prices are slightly more expensive. The brand is excellent. If I had RM300mil, I would buy over the company. What a steal at current prices.

Could you please reproduce your article in Focus Malaysia? If not, could you please inform us which date is the issue? Keep up the excellent work.

Alex Lu said...

Hi ronnie

Gong Xi Fa Cai to you.

I did not write an article for Focus. They asked for my take on the impact of GST on stockbroking industry. I shared my opinion & proposed regulations with them. I have not seen the article.