SCGM (7247): SCGM BHD: Earnings Continued To Stall
In QE31/10/2021 (2Q22), SCGM's net profit dropped 6% q-o-q or 19% y-o-y to RM7.8 million while revenue increased 5% q-o-q or 19% y-o-y to RM72.5 million.
For 2Q22, the Group revenue increased 5% q-o-q "resulting from higher sales of F&B packaging and extrusion sheet. Local sales increased by 4.7% to RM49.207 million from RM46.990 million in 1Q22 while export sales increased by 4.6% to RM23.335 million from RM22.312 million in 1Q22. Despite the 4.7% increase in Group revenue, the Group’s profit before tax decreased marginally by 0.1% to RM9.872 million in 2Q22 compared to profit before tax of RM9.880 million in 1Q22 mainly due to costs of COVID-19 vaccination exercise and related expenses for workers and loss on foreign exchange during the current quarter. The Group recorded 5.6% lower net profit of RM7.825 million in 2Q22 versus RM8.289 million in the preceding quarter due to higher deferred tax expenses".
SCGM's financial position is deemed healthy with current ratio at 1.65 times while gearing ratio is elevated at 0.55 time.
SCGM (closed at RM2.42 yesterday) is now trading at a PE of 15X (based on the last 4 quarters' EPS of 16.54sen). At this PE, SCGM is deemed fairly attractive.
SCGM's medium-term uptrend may have ended after the share prices went below the uptrend line, SS. Its next support should be at the horizontal line at RM2.35.
Despite the weaker financial performance, SCGM is still a good stock for long-term investment based on healthy financial position & fair valuation,
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