Results Update
For QE31/3/2016, Sign's net profit dropped 11% q-o-q or 63% y-o-y to RM5.0 million while revenue dropped by 0.5% q-o-q or 38% y-o-y to RM55 million. Revenue dropped q-o-q as a result of lower project revenue recognized from Kitchen & Wardrobe segment. PBT dropped 13% q-o-q mainly due to lower project profits recognized.
Table: Sign's last 8 quarterly results
Chart 1: Sign's last 33 quarterly results
Financial Position
As at 31/3/2016, Sign's financial position is deemed adequate. Current ratio stood at 1.9X while total liabilities to equity stood at 0.8x. Receivable increased from RM71 million to RM119 million but its debtors' collection period improved from 172 days to 150 days.
Valuation
Sign (closed at RM1.11 yesterday) is now trading at a trailing PE of 6.9 times (based on last 4 quarters' EPS of 16.2 sen). At this PER, Sign is deemed attractively valued.
Technical Outlook
Sign broke below its uptrend line, SS at RM1.10 in August last year (see Chart 2). Since then it has been moving within a downward channel (see Chart 3). 3 weeks ago, Sign showed signs of recovery. Its weekly MACD has almost gone above the zero line while ADX has gone above the 20-mark. Sign looks poised for its next upleg.
Chart 2: Sign's monthly chart as at May 24, 2016_10.00am (Source: ShareInvestor.com)
Chart 3: Sign's weekly chart as at May 24, 2016_10.00am (Source: ShareInvestor.com)
Conclusion
Based on satisfactory financial performance & position, fairly attractive valuation and mildly bullish technical outlook, Sign's rating is revised from a SELL to a BUY (a slow buy...).
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Sign.
SIGN (7246) - Sign: Poorer Earnings
http://nexttrade.blogspot.my/2016/05/sign-poorer-earnings.html
