CSCSTEL: Earnings rebounded

Results Update

CSCStel's net profit increased by 179% q-o-q to RM28.5 million. Revenue increased by 9% q-o-q to RM243 million due to significant increase in sales volume of some of its steel products and marginal increase in selling prices of some of its steel products. In line with the higher revenue and the write-back of the doubtful debt provision of RM16.9 million, profits soared. If the write-back is excluded, the profits would still have been significantly higher: 67%  for PBT and 20% for net profit.


Table: CSCStel's last 8 quarterly results


Chart 1: CSCStel's P&L for last 33 quarterly results

Valuation

CSCStel (closed at RM1.28 yesterday) has a PE multiple of 8.8 times (based the last 4 quarters' EPS of 14.5 sen). This plus its DY of 6.2% make CSCTEL a fairly attractive stock.

Technical Outlook

CSCStel broke above its intermediate downtrend line at RM1.10 in early January. Its immediate resistance is the horizontal line at RM1.30. Beyond that, it may encounter resistance at RM1.50-1.60.


Chart: CSCStel's monthly chart as at Feb 22, 2016 (Source: ShareInvestor.cm)

Conclusion

Based on the improved financial performance, fairly attractive valuation & 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.