This article first appeared in The Edge Financial Daily, on October 7, 2015.
SCGM Bhd (+ve)
SCGM (Fundamental: 2.6/3, Valuation: 1.7/3) was last picked by our momentum algorithm on June 16. The stock has since risen by 23.0% to close at RM2.56 yesterday.
Notably, local institutional fund KWAP has been accumulating shares of SCGM in the open market. As of Sept 23, KWAP owns a 7.36% stake in SCGM, up from 5.32% when it first emerged as a substantial shareholder on June 4.
To recap, Johor-based SCGM is a leading manufacturer of thermo-vacuum formed plastic packaging — mainly disposable plastic trays and containers — with an estimated 70% market share in Malaysia.
It is a beneficiary of the falling ringgit and crude oil prices. Export currently accounts for about 45% of total sales, denominated mostly in SGD and USD.
For 1QFYApril2016, sales rose 8.7% y-o-y to RM29.6 million while net profit surged 37.9% to RM4.9 million, boosted by lower raw material costs and foreign exchange gains.