Posted by D_investor > 2019-01-12 08:52 | Report Abuse

https://mcoremart.com/index.php/product/scgm-berhad-key-points-report/

Posted by RainT > 2019-01-27 18:01 | Report Abuse

Can buy now ?

Posted by commonsense > 2019-01-30 09:25 | Report Abuse

The company’s 1H19 result was really disappointing for the investors with total profit of only RM2.7mil a fall of more than 75% vs 1H18 results even though revenue actually grew by 7%. The fall in profit margins is contributed by higher raw material (resin), labour, financing and depreciation costs (of which the last 2 are related to the new plant in Kulai). 3Q19 is expected to still deliver below par result due to the delay in the migration to the new plant which is only expected to be completed by end Jan (instead of the earlier target of Oct 18).

FY19 would most probably end by the company only reaching a profit of around RM8-10mil. FY20 would see a better result but given the intense competition for some of the company main products (like lunchboxes and cups) couple with the still high operating costs, investors should only expect a full year profit of around RM15mil in FY20. At the current share price, this would mean the company is already carrying a higher than average valuation of 16x PE.

Another potential problem that need to be monitor by investors is the liquidity issue currently faced by the company with current debt obligation of RM51mil and a cash reserve of only RM7.6mil. If management fails to convert the high trade receivables and inventories (RM47mil and RM38mil respectively) to cash fast enough, the company might need to depend on using more debt to refinance existing debt. Given the higher interest rate trend, this would most likely hit on the P&L of the company in the future.

If you are looking to diversify your portfolio outside of SCGM (due to its earnings uncertainties, relatively high valuation and potential liquidity issue) I would recommend you to look at MBMR.

MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.

FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.

Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.

Good luck.

Posted by RainT > 2019-02-18 09:11 | Report Abuse

Going forward the resin price is on down trend , so SCGM costs will be lower

but the issue still on the depreciation & financing costs of the new plant in Kulai

but at least the lower resin price can increase some profit

Posted by oregami > 2019-03-15 15:57 | Report Abuse

biodegradable food container

Posted by oregami > 2019-03-15 16:05 | Report Abuse

hope u understand what u read

Posted by uptrending > 2019-03-20 19:28 | Report Abuse

QR till now not announced.
Usually announced by the 15th of March every year.

Why the delay?
Very bad results?
Need to massage?

Posted by Airline Bobby > 2019-03-20 19:30 | Report Abuse

Why u so kan chiong. Nothing else to do?

Posted by uptrending > 2019-03-20 21:59 | Report Abuse

Want to buy leong shares loh...
Hope that it will be selling like in Pasar Malam..

Anyway, QR will be announced on 26th..
Hmmm....any lelong then? haha!

Posted by oregami > 2019-03-23 15:04 | Report Abuse

hi fellow investor. pls spend 5min reading director statement in latest ar.

Posted by oregami > 2019-03-23 15:05 | Report Abuse

u will have a clearer idea scgm future direction n what the new plant is producing.

Posted by abang_misai > 2019-03-26 11:44 | Report Abuse

Result out this evening. Good luck folks.

Posted by abang_misai > 2019-03-26 17:40 | Report Abuse

Huge debt, demand going down due to more awareness to avoid one-time use plastic, Raw materials going up (strange), PE over 100. Forget it

Posted by Fabien Extraordinaire > 2019-03-26 17:50 | Report Abuse

@uptrending

your dream seems to come true, big lelong coming

maiden loss making quarter. screaming sales!

Posted by RainT > 2019-03-26 18:58 | Report Abuse

loss making quarter

no eyes see

expansion for what ???

make loss only ...

Posted by RainT > 2019-03-26 18:59 | Report Abuse

gone is the old days where certain ban the plastic usage and create more demand for SCGM
also gone is the time low resin price

now with high depreciation of new plant and uncertain of resin price

future is bleak for SCGM

Posted by KLCI King > 2019-03-26 20:48 | Report Abuse

From as high as RM3 to now RM1,
from high profit to now loss making,
from market darling to now market orphan.

Good luck to those still holding!

Posted by abang_misai > 2019-03-26 20:56 | Report Abuse

KLCI King.

Good one

Posted by value88 > 2019-03-26 21:38 | Report Abuse

The main reason for loss making is high operating expenses resulted from new plant's start-up cost. SCGM managed to maintain its sales revenue due to persistent high demand for its products. It will take some times for its new plant to contribute and bring the profit to new height.
The management claimed the new plant will be fully commissioned by end Apr'19.
It is good to buy on dip if its stock price falls to ~RM1 tomorrow. It is a stock needs to keep for ~1 year to bear fruits.

Posted by RainT > 2019-03-26 23:19 | Report Abuse

ya need to hold until the new plant start up costs can be cover by the new sales or efficiency to increase the profit


but by that time , not sure what will happen then , will the oil price go up and resin price go and margin get squeeze again ?

nobody knows, so need buy & hold & wait to see

but given the current situation of SCGM, I feel it is not attractive to buy

there are much more undervalue and high potential share appreciation company now in Bursa

Posted by ikah2000 > 2019-03-27 08:46 | Report Abuse

looking forward to south.... sell early when start market...

Posted by shpg22 > 2019-03-27 10:00 | Report Abuse

MAINTAINED fair price at 0.85. Interest cost to escalate further as more debts piling up as FY19 Net Profit is expected to hit 10 years record low.

Posted by newbie911 > 2019-03-27 10:13 | Report Abuse

Pbbank tp 1.39

https://klse.i3investor.com/blogs/PublicInvest/198698.jsp

Posted by uptrending > 2019-03-27 10:43 | Report Abuse

Followers of Kenanga sell and followers of Pbb buy... That will only make up the market... LOL

Posted by MK Zee Mun Keat > 2019-03-27 15:25 | Report Abuse

Is this good news?

https://www.thestar.com.my/business/business-news/2019/03/27/scgm-receives-rights-to-manufacture-ecorasa-brand-for-indonesian-market/

Posted by CFTrader > 2019-03-27 15:42 | Report Abuse

1. The spot price of the resin dropped since December 2019, it being consistently hovering at a lower price and further dropped to 1 year low ... currently...

2. Plastic ban and biodegradable food wrapping/tray demand will be getting bigger and bigger due to the rise of the environment consciousness... How SCGM capture the market and outbeat their competitor, yet is still an unknown.

3. Cost passing mechanism of these product is NOT high... imagine if you sell 10c for a wrap, and by tomorrow you say , oh i'm sorry , it's 20c now because the cost of producing those stuff escalated... I bet most of their customer will switch to their competitor that has a more stable pricing mechanism...

4. Those whom worried about rising inventory/receivable and decreasing cash balance , i just want to inform you that this is the nature of "trading" business... they rely on credit to revolve. Look at other "trading" business and you will see such cashflow is quite a norm... example SAMCHEM or the previous ECS .

5. I haven't tracked this counter for a long time, but base on the track record and the management attitude (willing to distribute the profit and dividend), i think you can consider this company ... when it is on it's upleg cycle again.

Sincerely
CFTrader

Posted by abang_misai > 2019-03-27 16:25 | Report Abuse

Apa mau risau. Public Bank kasi target Rm1.39

Posted by CFTrader > 2019-03-27 16:29 | Report Abuse

I wish everything will be well for you in your DAYANG sailing, abang_misai.

I would really wish you the very best.

But please be wary when you swim with that operator.

Sincerely
CFTrader

Posted by stocking > 2019-03-27 16:36 | Report Abuse

Public Bank IB, sorry to say got no substance, making a fool of themselves

Posted by uptrending > 2019-03-27 21:14 | Report Abuse

The gist are all in there. Short and concise.

Posted by arv18 > 2019-03-27 21:19 | Report Abuse

Unfortunately, if they are unable to turn around the business, it will be trading around 50 sen in a few months time...

Posted by Jhau65 > 2019-03-27 22:10 | Report Abuse

Seeing silver lining in resin cost for SCGM. Resin cost, which accounted for 70% of total operating costs, has been on the gradual downtrend since oil prices corrected more than 22% after hitting USD84.80 in Oct 2018. PP, which accounts for 50% of total resin usage, is expected to face more competitive pricing from Petronas following the soon-to-be-completed Pengerang downstream project as Petronas’ resin capacity easily outweighs Lotte Chemical’s. PET, which made up about 40% of the Group’s total resin usage, will see a surge of supply from its main supplier, MPI Polyester Industries following the opening of a new production plant in Vietnam. We believe the Group would be able to ride on recent lower resin cost in 4QFY19 as it adopts a spot-pricing policy for resin orders, which is up to 1 month only.

Posted by uptrending > 2019-03-28 00:07 | Report Abuse

Many forsaw no good QR for the 3rd Q but a good 4th Q... That's why there was no significant drop in the price after announcement of the loss making 3rd QR.

Two Market Sifu forecast a good 4th QR, Absolutelystock.com (Tong Kooi Ong) and Dynaquest (Dr Neoh Soon Kian).

Would you trust these two Veteran Market Sifu?

Posted by Dave > 2019-03-28 10:58 | Report Abuse

I am from SCGM Representative. My name is David Cheng. Plastics will not be a sunset industry as the company has recently announced its partnership with PT Harapan Mulia to develop Oxium degradable products for the mass market both domestic and international. SCGM has developed several OXIUM related products during the Sea Games and has continued to do so until today.

As mentioned before, we have just recently completed and commissioned our new plant, in anticipation of new development for a full range of Oxium products as well as moving forward more environment-friendly products. Our recent net loss was attributed to several factors, mainly the finance cost. Most of you are aware that our old plant is not able to expand further due to limitations in size and supply of electricity. A big major expansion is necessary for anticipation for greater growth and bigger market share.

Thank-you.

Posted by 1906901362688312 > 2019-03-28 11:09 | Report Abuse

In reply to MK Zee Mun Keat,
To answer your question, our strategic alliance with PT Harapan is a good move as local distributors would be able to understand the different cultural needs and wants of the local market. Most containers are developed under the "ECORASA", and since then it has gained traction. We are beginning to the fruit of our effort for the past year. We believe the market will bear even more fruit when we make further inroads to the market.

Posted by Jhau65 > 2019-03-28 13:15 | Report Abuse

Hi Dave.. wondering why major shareholder din buy more on weakness?

Posted by DAVE CHENG > 2019-03-28 13:22 | Report Abuse

I cant comment on other shareholders as every shareholders have different portfolio objectives.

Posted by CYuen Ng > 2019-03-28 14:26 | Report Abuse

Hi dave i noticed benxon has produced the cup based biodegradable plastic,any plan to sign up moa with brand like tealive in Malaysia?

Posted by DAVE CHENG > 2019-03-28 17:34 | Report Abuse

Hi Mr. Ng, for clarification SCGM do not produce biodegradable plastic. The terminology biodegradable must be from raw materials made of plant or organic base. However, SCGM produces photo and oxo degradable which is still plastic based but with degradable addictives such as OXIUM. We do not have any plans to sign up with franchise operator as the volume is not significant and retailers can purchase directly from our 30 plus distributors around Malaysia.

Posted by uptrending > 2019-03-28 19:27 | Report Abuse

Hi Dave Cheng,
Can you please explain and elaborate your "photo and oxo degradable which is still plastic", how long does it take for the plastic to be degraded and what is the true meaning of "degradable"? How well do the packaging materials used by SCGM go down with the Environment Authority? Are the materials considered "environment friendly"?

Thank you.

Posted by fullcreammilk > 2019-03-29 07:36 | Report Abuse

hi Dave Cheng, thanks for speaking to us here. If SCGM's products are oxo-degradable or photo-degradable, then the products likely won't degrade in the anaerobic conditions of our landfills (and Indonesia's, I presume). And EU is trying to ban oxo-degradable plastics because these might just break into microplastics and further harm the environment. Is SCGM going to address the limited potential (both environmental and economic) of these products?
https://www.european-bioplastics.org/eu-takes-action-against-oxo-degradable-plastics/
http://ecostandard.org/wp-content/uploads/oxo-statement.pdf

Posted by abang_misai > 2019-03-29 07:47 | Report Abuse

This new plastic is safe for food packing? Any research to prove it is safe?

Posted by abang_misai > 2019-03-29 07:48 | Report Abuse

Good highlight from fullcream.

Posted by RainT > 2019-03-29 11:17 | Report Abuse

@DAVE CHENG

please explain on impact of resin price on SCGM costs ?
and what action will SCGM make to control and make sure SGCM still profitable in the view of unstable resin price (resin price up and down follow the oil price)?

thanks!

Posted by Invest_Sensibly > 2019-03-29 15:13 | Report Abuse

Dave Chen,

I understand that fund raising is on the card. May I know when the right issues will be carried out? Kindly enlighten.

Posted by Invest_Sensibly > 2019-03-29 15:17 | Report Abuse

It seems fullmikcream's highlight is frightening. You can solve the degradability issue on condition the used plastic is exposed to sunlight for 5 years. If the used plastic is buried, it can take as much as 50 years to breakdown into microplastic which is a lot more harmful.


The European Commission has recommended EU-wide measures be taken against so-called ‘oxo-degradable‘ plastics. In a report published earlier this month, the Commission said that “a process to restrict the use of oxo-plastics in the EU will be started”. European Bioplastics (EUBP), the association of the bioplastics industry in Europe, strongly welcomes this clear commitment to take action. “EUBP has long been warning about the harmful effects of oxo-degradable plastics on the environment as well as the potential damage to the reputation and understanding of truly biodegradable plastics. Several cases of greenwashing and false claims have been reported over the past years that have lead to confusion about biodegradation in the general public,” says Hasso von Pogrell, Managing Director of EUBP.

Posted by Invest_Sensibly > 2019-03-29 15:22 | Report Abuse

Dave, with the advent of internet era, you cannot simply tipu us.

Posted by roimekoi > 2019-03-30 03:29 | Report Abuse

for your information, bioplastic is another degradable industry that uses corn plastic as their main source of plastic, European bioplastic is currently representing this organisation, currently in malaysia palm oil case, European countries is also trying to protect their own industry much like palm oil vs sunflower seed oil....
this is like american association research spam on butter for heart disease that after 50 years is not found to be true.

Posted by DAVE CHENG > 2019-03-30 13:32 | Report Abuse

For all post related to degradable materials, please be informed that an informal session will be held in Kuala Lumpur. Time and date to be advised. Please be informed if you wish to know more about degradable additives used by SCGM, all of you are invited to attend the INFORMAL SESSION. Strictly NO FOOD served. Subsequent to the event, please be advised that you post factual information about the company.

Posted by DAVE CHENG > 2019-03-30 13:34 | Report Abuse

For post on roimekoi, thank you for the clarification. Yes, EU are protecting their turf similar to the ban on oil palm right now.