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Results Update

For QE30/6/2019, CSCStel's net profit rose 174% q-o-q or 21% y-o-y to RM12.6 million while revenue rose 4% q-o-q or less-than 1% y-o-y to RM344 million.

Table 1: CSCStel's last 8 quarterly results

The Group’s revenue increased q-o-q mainly driven by the increase in sales volume of GI and PPGI products which more than offset the decline in sales volume for CRC. On a year-to-year basis, sales volume of GI and PPGI products dropped but was fully offset by increase in sales volume for CRC.

Table 1: CSCStel's sales revenue & volume from various segments

As a result, the Group’s profit before tax increased substantially, registering RM16.1 million in the current quarter compared with RM5.8 million in the preceding quarter. The significant improvement in profit of 176% mainly attributed to higher margin for certain steel products and the lower production cost as a result of lower raw material prices amid an intensely competitive steel market.

Graph: CSCStel's P&L for last 47 quarterly results

Financial Position

As at 30/6/2019, CSCStel's financial position is deemed very healthy with current ratio at 8.4 times and gearing ratio at 0.12 time. It has net cash of RM184 million which is equivalent to RM0.48 per share.


CSCStel (RM1.01 yesterday) has a PER of 21 times (based the last 4 quarters' EPS of 4.9  sen). If the cash balance of RM0.48 per share is deducted from the share price, CSCStel's PER will be reduced to 11 times. At this PER multiple, CSCStel is deemed fair. Due to the loss incurred, CSCstel reduced its dividend of 10 sen to 4 sen. As a result, its dividend yield plunged to 4%.

Technical Outlook

CSCStel is now resting on its long-term uptrend line, SS at RM1.00. The MACD seems poised to cross above the signal line. When that happens, the share price should be on an uptrend.

Chart: CSCStel's monthly chart as at Aug 26, 2019 (Source: MalaysiaStock.Biz)


Based improved financial performance & healthy financial position, fair valuation and mildly bullish technical outlook, CSCStel is a good stock for long-term investment.

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.

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