CSCSTEL: Earnings Soared On Higher Selling Prices

Results Update

For QE31/12/2021, CSCStel's net profit rose 290% q-o-q or 81% y-o-y to RM39 million while revenue rose 164% q-o-q or 45% y-o-y to RM532 million. The higher revenue was mainly due to significant increase in steel price, while the sales volume has reduced by 16.5% compared to preceding year’s corresponding quarter. Despite the decrease in sales volume, the Group reported a higher profit before tax of RM51 million in the current quarter, an increase of 77% compared with a profit before tax of RM29 million a year ago.


Table: CSCStel's last 8 quarterly results


Graph: CSCStel's P&L for last 57 quarterly results

Financial Position

As at 31/12/2021, CSCStel's financial position is deemed very healthy with current ratio at 6.2 times and gearing ratio at 0.18 time. It has net cash of RM162 million which is equivalent to RM0.44 per share.

Valuation

CSCStel (RM1.37 yesterday) has a PER of 5.9 times (based the last 4 quarters' EPS of 23.3 sen). If the cash balance of RM0.44 per share is deducted from the share price, CSCStel's PER would be reduced further to only 4 times. At this PER multiple, CSCStel is deemed very attractive. In addition, CSCStel has proposed a dividend of 14 sen for the current year- an increase of 100% over last year's dividend. At this dividend payout, CSCSTEL's dividend yield stands at 10.2%.

Technical Outlook

CSCStel has been trading in a wavy pattern. The share price appears poised to begin its next wave upwards.


Chart: CSCStel's monthly chart as at Feb 21, 2022(Source: isaham.my)

Conclusion

Based improved financial performance, healthy financial position and attractive valuation, CSCStel 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.