SCABLE: Top-line & bottom-line soared

Background

Sarawak Cable Berhad ("SCABLE") is mainly a provider of power solutions. It manufactures power cables, wires & conductors that are used in distribution lines, as well as inside in homes, offices and factories. It also produces steel poles, street lighting column and highway guardrails, structural steel, tower/ poles and steel bridges.

Recent Financial Performance

SCABLE's financial performance has been relatively pedestrian until the last 2-3 quarters. That's when it completed its acquisition of 2 subsidiaries, Universal Cable (M) Berhad and Leader Cable Industry Berhad. These companies boosted its revenue and profit substantially.

Table: SCABLE's last 10 quarters' P&L


Chart 1: SCABLE's last 10 quarters' P&L

Financial Position

As at 30/6/2015, SCABLE's financial position is very weak, with current ratio at 0.93 time and Total Liabilities to Total Equity at 2.74 times or Total Borrowings to Total equity at 1.61 times.

Valuation

SCABLE (closed at RM1.22 yesterday) is now trading at a PER of 8 times (based on annualized EPS of 14.9 sen). At this PER, SCABLE is considered fairly valued.

Technical Outlook

SCABLE is resting on its tentative uptrend line SS support at RM1.20-1.22. If it can break above its intermediate downtrend line, RR resistance at RM1.45-1.48, the share price may rally.


Chart 2: SCABLE's monthly chart as at Aug 25, 2015 (Source: ShareInvestor,com)

Conclusion

Based on improved financial performance, attractive valuation  & mildly positive technical outlook, SCABLE PetronM could be a good stock for a medium-term investment. However, your exposure should be optimized to take into consideration the group's weak financial position.

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, SCABLE.