SCGM: Steady Earnings Growth Continued

Results Update

In QE30/4/2021(4Q21), SCGM's net profit dropped 6% q-o-q or rose 11% y-o-y to RM7.6 million while revenue increased 5% q-o-q or 32% y-o-y to RM66 million. 

The Group Revenue increased q-o-q resulting from 13%-increase in local sales to RM46.106 million from RM40.757 million (due to higher deliveries of F&B packaging due to higher demand in general) which offset the 9.8% decline in export sales to RM19.638 million from RM21.768 million (due to lower sales of F&B packaging, in line with the past trend in which export sales would be higher during the few months prior to Christmas and New Year). 

The Group recorded a 24% higher profit before tax of RM9.792 million, which is in line with higher local sales recorded in 4Q21. Despite the increase in revenue, the Group recorded 6% lower net profit of RM7.621 million due to higher income tax expense and deferred tax expense.

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 49 quarterly results

Financial Position

SCGM's financial position is deemed healthy with current ratio at 1.55 times while gearing ratio is elevated at 0.62 time.

Valuation

SCGM (closed at RM2.45 yesterday) is now trading at a PE of 14 X (based on the last 4 quarters' EPS of 17.36 sen).  At this PE, SCGM is deemed fairly attractive.

Technical Outlook

SCGM has been on a steady rise, from the low of RM1.69 recorded in March this year. It is rising on an uptrend line, with support at RM2.30.


Chart 1: SCGM's daily chart as at Jun 28, 2021 (Source: Kenanga BTX)

Prior to this, it had a big drop from its all-time high of RM3.95 in August 2020. 

Chart 2: SCGM's weekly chart as at  Jun 28, 2021 (Source: Kenanga BTX)

Conclusion

Based on improved financial performance, healthy financial position & fairly attractive valuation, SCGM 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.