CSCStel's net profit increased by 93% q-o-q to RM10 million. Revenue dropped 12% q-o-q to RM258 million due to significant decreases in both sales volume and selling prices of all steel products. NP increased q-o-q due to significantly lower production cost as a result of the lower hot rolled steel prices.
Table: CSCStel's last 8 quarterly results
Chart 1: CSCStel's P&L for last 31 quarterly results
Valuation
CSCStel (closed at RM1.00 last Friday) has a PE multiple of 37 times (based the last 4 quarters' EPS of 2.7 sen). The company is only beginning to return to profitability after a losing streak of 4 quarters. If it can sustain its last 2 quarters' earning, then its full-year earning could be 8.6 sen. This would reduce its PER to 12 times.
Technical Outlook
CSCStel in an intermediate downward channel which stretches back to 2010. The share price is however support by long-term uptrend line, SS at RM0.95-1.00.
Chart: CSCStel's monthly chart as at AUg 14, 2015 (Source: ShareInvestor.cm)
Conclusion
Based on the improved financial performance & mildly positive technical outlook, CSCStel could be 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, CSCSTEL.
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