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Monday, June 11, 2018

(Icon) SAM Engineering (4) - Rising Revenue And Profitability

Author: Icon8888 | Publish date: Wed, 6 Jun 2018, 01:37 PM

I have written about SAM before :-

Last month, SAM released a strong set of result for the quarter ended 31 March 2018. Please refer to table below :

Key observations :

(a) Aerospace division reported 16% increase in revenue Q-o-Q from RM84 mil to RM92 mil. Operating profit also increased from RM8.2 mil to RM12.7 mil. This is an all time high for the division.

(b) Equipment division (which caters for semiconductor and HDD clients) has also done well. Revenue increased from RM59.4 mil to RM77.7 mil. Operating profit declined a bit due to forex losses as well as product mix.

Concluding Remarks

Based on prospective EPS of 62 sen (being 15.5 sen annualised) and price of RM7.30, SAM is currently trading at PER of about 12 times. I believe current valuation is undemanding as the group has just completed its new aerospace plant in Penang (backed by RM3.5 billion order book from Airbus). There is scope for earning to grow further.

With its technical capability and competent management, I believe SAM is a company with moat. Buy the stock and chuck it aside. You will be surprised how much it can grow in a few years time.

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