Superln: Earnings Continued to Rise

Result Update

In QE31/10/2018, Superln's net profit rose 48% q-o-q or 16% y-o-y to RM4.2 million while its revenue rose 5% q-o-q but declined 12% y-o-y to RM27 million. The higher revenue coupled with an increase in gross profit to about 36% as compared to 30% in the preceding quarter (due to more favorable exchange rate environment and better efficiency) led to an increase of 46% in profit before tax to RM5.7 million. Correspondingly, profit after tax for the group increased by RM1.4 million to RM4.2 million as compared to the preceding quarter.

Table: Superln's last 8 quarters' results

Graph: Superln's last 23 quarters' results

Financial Position

As at 31/10/2018, Superln's financial position is deemed healthy with current ratio at 3.4 times and gearing ratio at 0.26 time.

Valuation

Superln (closed at RM1.26 yesterday) is now trading at a trailing PER of 16x (based on last 4 quarters' EPS of 7.7 sen). At this PER, Superln is deemed fully valued. Superln paid out dividend totaling 3.5 sen for FYE30/4/2018. I think it may do the same for FYE30/4/2019. This will give the stock a dividend yield of 2.8%.

Technical Outlook

Superln has been moving sideways for the past 9 months. If the share price can go above RM1.50, the next upleg may begin.


Chart: Superln's weekly chart as at Dec 12, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position and fair valuation, Superln is a good stock for long-term investment.

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.