For QE30/6/2015, Sign's net profit dropped 71% q-o-q or 62% y-o-y to RM3.8 million while revenue dropped by 37% q-o-q or 18% y-o-y to RM55 million. Revenue & PBT dropped q-o-q as a result of lesser in project revenue being recognized from both Kitchen & Wardrobe and Glass & Aluminium segments.
Table: Sign's last 8 quarterly results
Chart 1: Sign's last 30 quarterly results
Valuation
Sign (closed at RM2.36 yesterday) is now trading at a trailing PE of 7.8 times (based on last 4 quarters' EPS of 30.2 sen). However, if the earnings continue to remain weak- like QE30/6/2015- then its full-year EPS would drop to 12.8 sen. This will push its PER to 18 times. Thus, Sign's valuation could be considered as expensive.
(Note: Sogn is trading at RM2.00 as at 9:15am)
Technical Outlook
Sign is trading at its uptrend line at RM2.00. A drop below this level could signal a bearish reversal in the stock.
Chart 2: Sign's monthly chart as at Aug 25, 2015_9.15am (Source: ShareInvestor.com)
Conclusion
Based on poorer financial performance and potentially demanding valuation, Sign's rating is revised from a BUY to a HOLD. Further decline in its share price below the uptrend line could tip the rating to a SELL.
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.
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