good understanding meng... 4.21 and above is my target.. chill la.. this stock is steady... most importantly.. this company able to transfer the cost of increase resin to the customer... margin of profit so far so good.. and better than many of its peers.... i am holding since 2.98 hehe.. plan to keep for many years..
if I have any relationship with him, I think I won't have the stupid idea to sell all my scgm shares back in 2014.. I'm truly regret on my decision. Now I'm one of the long term share holder in the company won't simply let go of the share anymore.
Plastics, packaging players to gain from capacity expansion March 30, 2017, Thursday Adrian Lim, adrianlim@theborneopost.com
KUCHING: Plastics and packaging manufacturers are poised to benefit from their capacity expansion to enhance their revenue growth over the long-term. The research arm of Kenanga Investment Bank Bhd (Kenanga Research) in a report yesterday said their expansions across the sector will continue to drive top-line growth in the long run. Elaborating further, the research firm said one of the companies under its coverage, SLP Resources Bhd (SLP Resources) is expected to continue with its capacity expansion plan. “The company is planning a new manufacturing facility to increase capacity by 58 per cent to 38,000 metric tonne (MT) by financial year 2018 (FY18) and targeting to penetrate the Chinese market in the future,” it explained in a note. Meanwhile, another packaging company SCGM Bhd (SCGM) is renting a 20,000 square feet (sqft) facility in Kulai, Johor to house two new extrusion machines, thus increasing the company’s capacity production by 44 per cent to 36,000 MT per year in financial year 2017 (FY17) ending April 2017. The company’s longer-term expansion plans include a new plant targeted for completion in FY19 ending April 2019 which will boost production capacity by an additional 74 per cent to 62,600 MT per year. Furthermore, Scientex Bhd (Scientex) continued to ramp up its operations with additional capacity production at its Rawang plant and Ipoh plant by the second half of financial year 2017 (2HFY17) ending July 2017. Scientex has also invested in a new plant in the US due in the second half of 2018 (2H18) to boost the group’s capacity and sales. “Another company, Thong Guan Industries Bhd (Thong Guan) is constantly investing in capacity expansion and research and development (R&D) to improve sales and profit margins on existing products as well as revamping its customer base to target more multinational corporations (MNCs),” it added. “As a result, the continued expansions by plastics and packaging manufacturers should ensure their long-term earnings growth beyond FY18.” For the plastics and packaging manufacturers financial results for FY17 and FY18, the research firm expects strong earnings growth of 25 per cent and 33 per cent for SLP Resources, 26 per cent and 29 per cent for SCGM, 18 per cent and 19 per cent for Scientex and 12 per cent and 14 per cent for Thong Guan. Owing to the steady expansion plans backed by strong demand for plastic products, Kenanga Research believed the plastics and packaging manufacturers are going to register strong earnings growth in the future supported by more sales from increased production. Besides that, the research firm maintained its bullish outlook on the sector due to favourable macroeconomic fundamentals. “The plastics and packaging sector will continue to remain resilient in the near term driven by resilient demand, allowing plastic packagers under its monitoring to embark on robust capacity expansion over the next one to two years, and product innovation, translating to strong double-digit earnings growth in FY17-18,” it said. The prospects of the sector remain strong supported by the weak ringgit environment and low resin cost which it has accounted for in its earnings estimates for plastics and packaging manufacturers under its coverage, allowing the sector to thrive on positive market sentiment.
KUALA LUMPUR (April 28): Thermos-vacuum form plastic packaging manufacturer SCGM Bhd has proposed a bonus issue of 48.4 million new shares on the basis of one bonus share for every three existing shares, to reward shareholders. In a filing with Bursa Malaysia today, SCGM also proposed a bonus issue of 19.36 million warrants on the basis of two free warrants for every 15 existing share. The illustrative exercise price for the three-year tenure warrant is RM4.05, which represents a premium of about 29.39% to the theoretical ex-bonus price of RM3.13 per share, based on the five days-weighted average market price of SCGM shares up to and including April 27 this year. Full exercise of these warrants are estimated to be capable to raise some RM78.4 million, which would be utilised as additional working capital for SCGM’s daily operation. SCGM’s current share base is 145.2 million shares, and will enlarge to 193.60 million shares, subsequent to the bonus issue of new shares. The group’s share base would expand up to 212.96 million shares, assuming full exercise of all warrants. These two corporate exercises require shareholders’ approval, and is expected to be completed within two months. SCGM’s share price fell four sen or 0.98% to close at RM4.05 today, giving it a market capitalisation of RM588.06 million. Year-to-date, the counter has risen 20.5%. http://www.theedgemarkets.com/article/scgm-proposes-1for3-share-bonus-issues
Very happy with this surprised bonus. Will hold and add. Wait for Perak to ban polystyrene lunch boxes in June 2017. Wait for Johor to ban Polystyrene lunch boxes in Jan 2018.
SCGM Berhad - Proposes Bonus Issue and New Warrants Date: 02/05/2017 Source : PUBLIC BANK
SCGM has proposed to undertake two corporate exercises, a bonus and a new warrant issue, to increase trading liquidity and raise new capital for the group. It plans to issue 48.4m new shares on the basis of one bonus share for every three existing shares held and also 19.3m warrants on the basis of two free warrants for every 15 existing shares held. We welcome the move as both exercises resolve the current thin liquidity issue and also strengthen its balance sheet for working capital purposes in the future. Pending the completion of both exercises, we continue to rate the company with an Outperform call and TP of RM4.26. • Issuance of 1-for-3 bonus issue. Management has proposed a bonus issue of 48.4m new shares on the basis of one bonus share for every three existing shares held. Given the positive prospects, we believe the higher liquidity could boost share prices. • Issuance 2-for-15 new warrants. It also plans to issue 19.3m warrants on the basis of two free warrants for every 15 existing shares held. The warrants will have a tenure of three years, exercisable any time during the period. The proposed issuance of warrants is expected to raise about RM70-80m in gross proceeds upon full exercise, and will will be used to finance its additional working capital especially when the new manufacturing plant in Kulai is operational. • Subject to approvals. Both corporate exercises are subject to the approvals of i) Bursa Malaysia and ii) shareholders at an extraordinary general meeting. Both proposals are expected to be completed by 2H 2017. • Valuation impact. While the proposed issuance of new warrants will dilute its EPS in the near-term, it will nevertheless be cushioned by the additional earnings contribution from the new manufacturing plant in Kulai, which is expected to increase its extrusion capacity from 36m kg/year to 62.6m kg/year. The plant is expected to be operational by June 2019. The market price and our target price will be adjusted accordingly post the bonus issue meanwhile.
NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : BONUS ISSUES SCGM BHD (SCGM OR COMPANY) (I) PROPOSED BONUS ISSUE OF SHARES; AND (II) PROPOSED BONUS ISSUE OF WARRANTS COLLECTIVELY, THE "PROPOSALS")
SCGM BHD
Type Announcement Subject NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) BONUS ISSUES Description SCGM BHD (SCGM OR COMPANY)
(I) PROPOSED BONUS ISSUE OF SHARES; AND
(II) PROPOSED BONUS ISSUE OF WARRANTS
COLLECTIVELY, THE "PROPOSALS") Unless otherwise defined in this announcement, all terms used herein shall have the same meaning as those defined in the earlier announcement in relation to the Proposals dated 28 April 2017.
On behalf of the Board, M&A Securities wishes to announce that the additional listing application and the draft circular in relation to the Proposals has been submitted to Bursa Securities.
This announcement is dated 23 May 2017.
Announcement Info Company Name SCGM BHD Stock Name SCGM Date Announced 23 May 2017 Category General Announcement for PLC Reference Number GA1-23052017-00058
SCGM: “Sure Can” Growth Model Author: HauToInvest | Publish date: Mon, 5 Jun 2017, 07:51 PM
When we consume packaged food and drinks, we seldom notice the manufacturers of the packaging and their businesses. SCGM Bhd (SCGM:KLS, stock code: 7247) are factories in Malaysia that process input materials such as PET, PP and transform them into consumer products in food packaging. SCGM is a very typical Malaysian founder-operated business that started almost from scratch to eventually listed in the main market in KLSE. Here is a nice corporate milestones captured from its annual report 2016.
[SCGM] Change In Substantial Shareholder's Shareholding - KUMPULAN WANG PERSARAAN (DIPERBADANKAN) on 07-Jun-2017 Date of Change Type Number of Shares 05-Jun-2017 Disposed 12,900
Total no of securities after change Direct (units) 6,024,650 Direct (%) 4.15 Indirect (units) 1,660,700 Indirect (%) 1.14 Total (units) 7,685,350 Total (%) 5.29 Date of Notice 07-Jun-2017
[SCGM] Change In Substantial Shareholder's Shareholding - KUMPULAN WANG PERSARAAN (DIPERBADANKAN) on 16-Jun-2017 Stock [SCGM]: SCGM BHD Announcement Date 16-Jun-2017 Substantial Shareholder's Particular: Name KUMPULAN WANG PERSARAAN (DIPERBADANKAN) Address LEVEL 36, INTEGRA TOWER, THE INTERMARK 348, JALAN TUN RAZAK, KUALA LUMPUR 50400 Wilayah Persekutuan Malaysia. Details of Changes: Currency - Date of Change Type Number of Shares 13-Jun-2017 Acquired 110,400 Registered Name KUMPULAN WANG PERSARAAN (DIPERBADANKAN) Registered Address LEVEL 36, INTEGRA TOWER, THE INTERMARK, 348 JALAN TUN RAZAK, 50400 KUALA LUMPUR. Nature of Interest Indirect Interest Shares 0 Reason ACQUISITION OF SHARES IN OPEN MARKET BY KWAP'S FUND MANAGER Total no of securities after change Direct (units) 6,024,650 Direct (%) 4.15 Indirect (units) 1,771,100 Indirect (%) 1.22 Total (units) 7,795,750 Total (%) 5.37 Date of Notice 15-Jun-2017
SCGM - Another Set of Record Earnings Date: 22/06/2017 Source : PUBLIC BANK Stock : SCGM Price Target : 4.26 | Price Call : BUY Last Price : 4.12 | Upside/Downside : +0.14 (3.40%)
SCGM registered core earnings of RM23m for FY17, an increase of 15% YoY. The new level of record earnings was helped mainly by encouraging local sales in its food packaging products. The results were in line with our and consensus forecast. Sales from extrusion, medical and ‘others’ segment outperformed with a 74% YoY growth, spurred by additional production lines while the food & beverage segment grew 12.4% YoY. A fourth interim dividend of 2sen was declared for the quarter. Pending further management guidance from the analyst briefing this coming Friday, we maintain our Outperform call with an unchanged TP of RM4.26 based on 21x FY18 EPS. • 4QFY17 revenue jumped 62.8% YoY. The Group registered an encouraging growth of 62.8% YoY to RM52.9m in 4QFY17 on the back of better plastic packaging product sales from local demand (+89.5% YoY) while the export sales market also grew (+24.9%). Local sales made up 68% during the quarter compared to 59% in 4QFY16. Thermoform lunchboxes was the key growth driver for the Group as it contributed about RM8m (3QFY17: RM10.3m, 2QFY17: RM2m, 1QFY17: RM1.4m), helped by the enforcement of the ban of polystyrene food boxes in several states, namely, Johor, Perak, Selangor, Melaka, KL and Penang. • 4QFY17 core earnings (QoQ: -15%, YoY: +50%). Stripping out foreign exchange gains, the Group’s core earnings surged 50% YoY to RM5.1m in 4QFY17, mainly driven by improved sales from its plastic packaging products. Gross earnings margin fell from 15.4% to 12.3% however as operating expenses jumped 68.7% YoY attributed to an increase in resin cost, depreciation of property, plant and equipment, electricity cost and packaging materials. • Setting higher standard for its products. Management has put in a new line of degradable food packaging in June. It also introduced environmentally-friendly degradable food packaging into the Malaysian market. Its “Benxon” brand of thermoform lunchboxes have started carrying the Eco-Label mark, which will make it a more competitive brand name in the overseas markets. • Maintain Outperform call. We like the company for its i) recession-proof business, ii) substantial capacity expansion in the pipeline and iii) double digit growth in the biodegradable plastic packaging products for the next few years. Source: PublicInvest Research - 22 Jun 2017
SCGM - Establishing A New Plant Date: 28/06/2017 Source : PUBLIC BANK Stock : SCGM Price Target : 4.26 | Price Call : BUY Last Price : 4.19 | Upside/Downside : +0.07 (1.67%)
We came away from SCGM’s analyst briefing last week with some encouraging updates. As expected, its degradable lunch boxes continue to receive strong response owing to the regulatory ban on polystyrene in Penang, Selangor and Federal Territory, which made up the bulk of its lunchbox sales. Apart from sharing on the benefits of being a silver sponsor in the upcoming SEA Games in August 2017, management also highlighted its plans to rent a 47,000 sq ft premise in Klang to produce lunch boxes to cater to the Klang Valley market. We continue to maintain our Outperform call with an unchanged TP of RM4.26 based on 21x FY18 EPS. • Results round-up on FY17. All three core segments delivered decent growth during the quarter. Food & other packaging, which contributed more than 82% of the Group’s sales, posted 20.6% YoY growth driven by stronger sales volume in lunchboxes and cups. Electronic and extrusion, medical & others grew 16.3% and 57.2%, respectively. Local sales grew at a larger pace, up 56.4% (vs exports: +8.7% YoY) as the company added more local customers in FY17. At the cost of securing more market share however, EBITDA margin fell from 24.2% to 19.9% due to more competitive pricing. • Resin cost normalising. In tandem with oil prices, average resin cost had risen from RM3.60/kg in November 2016 to an all-time high of RM4.70/kg in March before softening to the current level of RM4.10/kg. It expects to see some discounts given going forward, which will see its average selling price fall from RM8-9 kg/year to RM7-8 kg/year. • Setting up a new plant in Klang soon. The company has rented a 47,000 sq ft plot of land in Telok Panglima Garang, Klang to house 4 thermoform machines and 2 extruders with a capacity of 5m kg/year. The total investment cost is about RM20m. The new plant, which will be fully commissioned in December 2017, will produce 800,000 lunch boxes/day (estimated revenue: RM40m) to cater mainly to the Klang Valley market and reduce transportation costs. On the progress of the construction of the new plant in Kulai which has an extrusion capacity of 62.6m kg/year, it is on track to be completed by December 2018. Upon completion, it will centralize all its existing production capacity to the new plant. In total, it will see a combined production capacity of 67.6m kg/year upon the completion of both plants. • Outlook guidance. Management expects to see lower tax rate in FY18 on the back of reinvestment allowance and tax breaks as a silver sponsor of Malaysia’s SEA Games in August. It will contribute about RM0.5m cash and sponsorship of lunchboxes worth RM0.5m for the SEA Games athletes. Apart from enjoying exclusive marketing and branding rights during the SEA Games, it expects to see a spillover effect worth RM8-10m as it will rake in more than 7m lunchbox sales to more than 20,000 officials and volunteers. Source: PublicInvest Research - 28 Jun 2017
wow, another capex, thats good news, but something funny there.. the size is twice time bigger than the rented factory in kulai, the machine setup looks same 2 extrusion machines and 4 thermo-forming machines but the capital very much different from both, kulai factory capacity is 11m but klang only 5m? hmm...
SCGM’s growth driven by increased capacity in FY18
Kenanga Research
The Edge Financial Daily
June 29, 2017 09:55 am MYT This article first appeared in The Edge Financial Daily, on June 29, 2017.
SCGM Bhd (June 28, RM4.16)
Maintain market perform with a target price of RM4.90:
We attended SCGM Bhd’s fourth quarter ended April 30, 2017 (4QFY17) analysts’ briefing and remain positive about their long-term outlook. Despite slight margin compression in FY17, growth is driven by increased capacity in FY18 from a newly rented factory in the Klang Valley riding on increased demand for both food and beverage (F&B) packaging and plastic cups, while we also expect lower tax rates in FY18. All in, we lower FY18 estimated (FY18E) earnings (by 6%) and maintain FY19E numbers. Despite strong bottom-line growth in FY17 (up 19% year-on-year [y-o-y]), earnings before interest and tax (Ebit) margins compressed to 15.1% in FY17 (versus 19.7% in FY16) mostly due to higher resin cost, while we believe we have accounted for other cost increases previously (which are staff cost, utilities, depreciation of plant and equipment). Management had guided that resin cost had moderated since a high in February and March 2017 (4QFY17). However, the group’s current resin cost is still higher by about 10% y-o-y. SCGM announced its plan to rent a new 47,000 sq ft factory in Telok Panglima Garang, which will be its first factory in the Klang Valley, beginning July, and will be running at full capacity by December.
The factory will house four thermoforming machines and two extruders, producing 5,000 tonnes per year (at full capacity), costing RM20 million in capital expenditure which the group will fund from internally generated funds. This newly rented factory will produce lunchboxes to cater to the existing Klang Valley market, which may provide better efficiency in the longer run from reduced transportation cost. All in, post the inclusion of this newly rented factory, we expect FY18 to FY19 average capacity to increase to 39,200 tonnes to 49,900 tonnes per year (from 36,000 tonnes to 44,900 tonnes per year).
We are expecting FY18 capital expenditure (capex) allocation of RM60 million (from RM51 million) to be utilised mostly for the second factory construction in Kulai, and the new Klang Valley rented factory, while FY19 capex of RM54 million will be utilised for the Kulai factory construction. As a result, we lower our FY18E effective tax rates to 13% (from 18%) post increasing our capex estimates as SCGM will benefit from reinvestment tax allowance, while we maintain FY19E tax rates at 18%.
All in, post accounting for increased top-line growth from the new capacity in the rented factory, Ebit margin compressions from higher raw material cost in FY18 to FY19 to 16.2% to 17.9% (from 19.1% to 19.8%) , and lower effective tax rates in FY18 to 13% (from 18%), we are expecting FY18 to FY19E earnings of RM30.9 million to RM38.1 million. We are comfortable with our “market perform” call as most upsides have been priced in, while the group’s longer-term prospects are intact in light of decent earnings growth from long-term extrusion capacity expansion, and the F&B container market opening up on the state-wide polystyrene container ban. —
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Joblessrich
152 posts
Posted by Joblessrich > 2017-03-16 12:52 | Report Abuse
Meng, very good write up. Thank you.
I will hold and add if price weakens