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Thursday, June 18, 2015

SCGM: Q4FY15 Job well done

Was away for a short break in Tioman Island last weekend and need some time to catch up a bit of my work this week. 

SCGM berhad just released its latest quarter report today. All I can say is the result is as good as expected. 

With the lower raw material cost and favorable currency exchange rate, all elements are doing good for SCGM. It's no surprise that the group able to chalk up 24% and 19.9% operating profit margin and net profit margin respectively which were highest for the past 2 years. 

For full year FY2015, the group's revenue increased 6% but net profit increased tremendously by 36.23%. This demonstrates the margin playing an important role to its earning power. Investors really need to take note when the petrol price increases as well as RM is strengthen in future.

In terms of balance sheet, nothing special to mention other than the drop in cash balance. 

Coupled with the cash flow statement, I think the drop in cash on hands is not a big concern as the group spent a big amount of capex on the new product, plastic cups production. The group's free cash flow all this while was pretty good. So, I am confident the group able to generate cash easily. The fact that the group announced to pay dividends quarterly last quarter shows how well and confidence the group in managing his cash flow internally. 

ROE and ROIC increased to around 21%. and 21.8% respectively. It's brilliant to me.

The group currently valued at a PE of 17. High? Low? Gonna use PEG? 

I guess the price will move in tandem with its result moving forward. But don't expect a big jump in its share price, I guess it will move up slowly until its growth story ended one day.

The group also announced its first interim dividend for FY2016. So fast! 

Given that the group's export sales contributed around 46% to the group's overall revenue and the group purchased raw material locally, the current scenario is good to the group.

Based on the currency sensitivity analysis showed in annual report 2014, the continuing weakening of RM against USD and SGD will favour the group's bottom line moving forward. 

Furthermore, the new plastic cup production had commenced operation in May. 

But my concern is after the GST implementation, seems like the consumer sector is being hit quite hard. 

Will it affect the plastic containers the group is producing?

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