SCGM: Earnings Continue to Rise

Results Update

In QE31/10/2020 (2Q21), SCGM's net profit rose 16% q-o-q or 138% y-o-y to RM9.6 million while revenue increased 7% q-o-q or 14% y-o-y to RM61 million. The group revenue increased 7% q-o-q resulting from higher sales contribution from local market on higher deliveries of F&B packaging. The Group recorded 24% higher profit before tax of RM10.7 million in 2Q21 compared to profit before tax of RM8.7 million in 1Q21, which is in line with higher local sales recorded in 2Q21. In line with the increased revenue, the Group noted 16% higher net profit of RM9.6 million in 2Q21 versus RM8.3 million in the preceding quarter

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 47 quarterly results

Financial Position

SCGM's financial position is deemed healthy with current ratio at 1.49 times while gearing ratio is elevated at 0.67 time.

Valuation

SCGM (closed at RM2.48 yesterday) is now trading at a PE of 16.6X (based on the last 4 quarters' EPS of 14.92 sen).  At this PE, SCGM is deemed fairly attractive.

Technical Outlook

SCGM peaked at RM3.95 in early August. It has dropped back to around the RM2.50 level in the past few days. Its 200-day SMA line support is not far away at RM2.32.


Chart 1: SCGM's daily chart as at Dec 21, 2020 (Source: Malaysiastock.biz)


Chart 2: SCGM's weekly chart as at Dec 21, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position & fairly attractive valuation, SCGM is a good stock for long-term investment. The current price downtrend is likely to continue until a reversal is achieved, which may come once the share prices have surpassed the RM3.00 mark.

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.