Superln: Earning Rebounded

Result Update

In QE1/7/2018, Superln's net profit rose 106% q-o-q but dropped 20% y-o-y to RM2.8 million while its revenue rose 1.4% q-o-q but declined 2.3% y-o-y to RM26 million. Despite a relatively stagnant revenue, Superln registered a recovery in its gross profit to about 30% as compared to 23% in the preceding quarter as a result of a more favorable exchange rate environment and better efficiency. On the back of a better gross profit margin, the group registered an increase of 178% in profit before tax to RM3.9 million in the current quarter as compared to RM1.4 million in the preceding quarter. Correspondingly, its profit after tax for the group increased by RM1.4 million to RM2.8 million as compared to the preceding quarter.

Table: Superln's last 10 quarters' results

Graph: Superln's last 22 quarters' results

Financial Position

As at 31/7/2018, Superln's financial position is deemed healthy with current ratio at 3.9 times and gearing ratio at 0.25 time.

Valuation

Superln (closed at RM1.20 yesterday) is now trading at a trailing PER of 16x (based on last 4 quarters' EPS of 7.3 sen). At this PER, Superln is deemed fully valued.

Technical Outlook

Superln has been moving sideways for the past 6 months. If the share price can go above RM1.50, the next upleg may begin.


Chart: Superln's weekly chart as at Sep 18, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position and fair valuation, I revise my rating for Superln from a SELL to a HOLD.

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.