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?

SCGM: One of the Best Quarters

Just went back from vacation and found out that SCGM Berhad had released its third quarter report last week. The overall performance was good to me. 

The group managed to chalk up an impressive performance, probably the best for the past 7 quarters. 

Highest revenue, albeit a little bit higher than Q1FY2015. 

Highest operating profit margin and net profit margin. The lower cost of goods sold due to the drop of crude oil price definitely helped the group. Furthermore, SCGM group purchased its raw material locally but export some of its products. The weakening of RM against USD and SGD currency gave them a helping hand. I foresee its profit margin will stable at one point as the customers will request lower selling price for its products. You hardly find a plastic manufacturer with a 2-digit profit margin. 

As a result, it's no surprise that the group managed to record highest net profit among the past few quarters. 

On separate note, its cash balance dropped a lot due to high capex incurred and dividend payment in this financial year. High capex was for the new production line of plastic cup. 

Given the good cash generability of the group, it should be no problem for the group as its strong operating cash flow should cover its cash outflow. 

For the financial year to date, export sales amounted to 46% of total sales. 

Capex for the new production line were delivered at Jan 2015. 

For the prospects column, the board is quite confident going forward to the next financial year. Better export sales and also the contribution from the new product line. 

The board also mentioned that the input cost like power will impact on its margins. I thought there was a tariff drop last month? 

And surprisingly, the board decided to pay dividend every quarter. For the financial year-to-date, the group had declared 9 cents dividends. There should be another dividend payment for the last quarter of the financial year. 

I will continue to hold this counter. Not so recommend to buy now since its current price is quite high. I will sell it off if there is a sudden surge in price or its growth does not meet my requirement as its current valuation is highly depends on its growth and good fundamental.