One of Axcapital’s top picks, Scope Industries has continued to outperform expectations. We originally highlighted Scope at 24 sen back in 25 July, and the stock has risen 80% in less than 4 months!

Yesterday, in US after-market hours, Sonos reported its final 4Q21 earnings that again smashed Wall Street estimates by 173%! And has been doing it 6 quarters in a row. Recall that when we wrote about this 3 months ago, Sonos 3Q21 had also exceeded expectations by 258%. Sonos has also topped revenue estimates for the last 4 quarters.

In its 4Q21 earnings conference call, Sonos raised its revenue guidance for FY22 from US$1.86bn to US$1.93-2.0bn. It expects revenues to grow at 12-16% in FY22 over FY21. Based on such impressive outlook, Sonos expects to continue growing significantly ahead of its FY24 financial targets.

Sonos CEO, Patrick Spence said, “Our fiscal 2021 results put us significantly ahead of schedule toward achieving the fiscal 2024 targets outlined at our investor event this past March. Our brand is strong. Our demand is incredibly robust and we are confident we can sell every unit we can make this year. We have an exciting and robust product roadmap ahead, and we are confident in our ability to continue to drive sustainable, profitable growth over the long-term.”  

Sonos management continues to reiterate that they have so much order backlog that it will take the whole of 2022 to fill them…. Guess what? THESE ORDERS ARE COMING TO SCOPE!

Axcapital believes that as covid restrictions in Malaysia ease and as Scope’s new capacity comes onstream by early 2022, it is in the driving seat over the next few quarters to exponentially accelerate its orders from Sonos.   

As Malaysia had only lifted covid restrictions not long ago, we do not expect its next quarter 1QFYJun22 results (to be announced by end Nov) to be mind-blowing.  However, in subsequent quarters, we should start to see incremental improvements in its performance.  

Scope will be trading ex-bonus issue of 3 warrants for every 10 shares this Monday, on 22 Nov. So investors who wish to be entitled to the free warrants need to buy Scope by the end of today’s trading day.  

Axcapital reiterates its conviction that Scope will be a multi-bagger investment in the years to come. Investors who bought Scope when we first highlighted it in July have been 80% richer so far. We view any weakness in its share price as a buying opportunity for the long haul.

Disclaimer: The views presented  herin does not constitute a recommendation or solicitation to buy or sell the securities mentioned herein. All information and opinions expressed are subject to change without notice. The publisher may from time to time have a position in the securities mentioned. This publication is based on pulicly available information and any information from sources are believed to be reliable but we do not make any presentations as to its accuracy or completeness.