SCGM Bhd (+ve)
SCGM (Fundamental: 3/3, Valuation 2.1/3) is a beneficiary of a weaker ringgit as well as lower oil prices (lower resin raw material costs).

SCGM is a leading manufacturer of thermo-vacuum formed plastic packaging, mainly disposal plastic trays for the food and beverage, electronics and medical sectors. Export, largely to Singapore and Australia, accounted for 47% of sales in 1HFYApr2015. It will gain from stronger Singapore dollar and US dollar.

Balance sheet is strong with net cash of RM10.2 million or 12.7 sen per share. With very little leverage, ROE grew from 9.5% in FY2012 to 16.5% in FY2014.

For 1HFY2015, net profit grew an outsized 14.7% y-o-y on 3.1% revenue increase. The higher net margin was underpinned by lower raw material costs, increased production and economies of scale.

The stock has gained 31.0% year-to-date. It currently trades at a trailing 12-month P/E of 15.8 times and 2.8 times book.

This article first appeared in The Edge Financial Daily, on March 6, 2015.