Success: Earnings Plummeted

Results Update

For QE31/3/2018, Success's net profit plummeted 83% q-o-q or 88% y-o-y to RM1.1 million while revenue dropped 18% q-o-q or 17% y-o-y to RM76 million. PBT dropped sharply mainly due to decrease in sales from transformer and lighting segment and losses under process equipment segment due to its lower margin contribution from certain projects as compared to immediate preceding quarter ended 31 December 2017.


Table: Success's last 8 quarterly results


Graph: Success's last 44 quarterly results

Valuation

Success (closed at RM1.00 on 28/5/2018) is now trading at a PE of 10 times (based on past 4 quarters' EPS of 10.1 sen). At this PER, Success is deemed fairly valued.

Technical Outlook

Success has been in a steady decline after it peaked at RM2.15 in May 2017.


Chart 1: Success's weekly chart as at May 28, 2018 (Source: ShareInvestor.com)

Success is in a long-term uptrend line with support at RM0.80.


Chart 2: Success's monthly chart as at May 28, 2018 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance, I downgrade Success's rating to HOLD. Nevertheless Success would be fairly attractive if the share price dropped back to RM0.80.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.