SCGM (7427) - Turnover raise with 2 Sens Dividends

SCGM General Profile

The Company is one of the largest food packaging producer in Malaysia. The Group offers one stop solution of packaging needs for all the customers and industrial. As at 30 April 2016, SCGM able to produce more than 16.9 million tons of extrusion sheets.

Review of Quarter Results

Based on current quarter results, the Group recorded Revenue of RM45.987 million which higher than previous quarter by RM 8.7 million or 23.4%

Revenue increase mainly due to high demand of local sales, Plastic Packaging Products (as highlighted in green). Currently the Group is focusing on local market due to many states follow the suite on ban of polystyrene. 

However, not hard to observe that Profit was lower than previous quarter even through Revenue has increased. The reason is increase of cost of production,raise of resin price, depreciation of property, plant and equipment, higher consumption of electricity and packaging (raw material).

Higher of Production cost was significantly affect profit before tax by 20.7% Besides, company Gross Profit Margin also drop from 24% to 16%

Dividends 

Table shown the dividend paid out for the company with recorded Dividend Yield at 1.9% 

The Group start to pay Dividend more frequent since 2014. 

Borrowings

We should take note that company borrowings has increased to RM21.3 million due to purchasing Property, Plant Equipments (as recorded in previous Quarter Result). 

Future Prospects

1. More States going to follow the suite on ban of polystyrene. Thus, demand of substitution for lunch box will increase 

2. Upcoming 2017 SouthEast Asian Games and ASEAN Para Games going to host in Kuala Lumpur at Aug 17 and Sep 17. It going to increase demand for disposable lunch box and cups.

3. Demand for backery, sushi, fruits and vegetables products will increase demand due to awareness of effect from ban of polystyrene trays and for more hygienic packaging.

Overall, we still optimize for company future growth due to the strong local sales, and the frequency of Dividend Payout.

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