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Tuesday, December 22, 2015

Stock With Momentum: SCGM

This article first appeared in The Edge Financial Daily, on December 22, 2015.

SCGM Bhd ( Valuation: 1.70, Fundamental: 2.60) (-ve)

SCGM (Fundamental: 2.6/3, Valuation: 1.7/3) closed 0.3% higher at RM2.98 yesterday. The stock, one of InsiderAsia’s Top 10 stocks for 2015, has risen by 147.7% year-to-date.

This was partly due to its stellar earnings results, boosted by the weaker ringgit and lower commodity prices.

For the latest 2QFYApril2016 results, sales grew 30.6% y-y to RM34.1 million while net profit jumped an outsized 57.7% to RM4.8 million. It also declared a second interim dividend of 3 sen per share, bringing total dividends for FY2016 to 6 sen, so far. The dividend goes “ex” today.

To recap, Johor-based SCGM manufactures thermo-vacuum formed plastic packaging, comprising mainly disposable plastic trays and containers. More importantly, it derives about 75% of its sales from the resilient F&B industry. Export accounts for about half of its sales.

SCGM recently completed a private placement, raising approximately RM31.3 million. The company plans to invest RM22 million to expand production capacity by 34%.

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