TECHNICAL AND FUNDAMENTAL ANALYSIS

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SCICOM (0099) - Technical & Fundamental Analysis

April 6, 2019

Technical Analysis

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- After the quarterly report announcement on Nov 22, 2019, SCICOM shares price drop by 46.65% due to poor financial performance.

- SCICOM shares price has breakout neckline on Nov 30, 2019.

- It drops further and opened at RM0.885 on Dec 17, 2019, after the government announced the cancellation of Prestariang Bhd's national immigration control system (SKIN) project.

- The shares price re-bounced technically after the significant drop in a short period. 

- It tried to challenge EMA 120 days (Half Yearly line) but it fails and drops below EMA 60 (Quarterly line) and EMA 20 (Monthly line) on Mar 5, 2019

- Thus, selling pressure continues to become stronger to further push SCICOM shares price lower.

- Need to wait until EMA 20, 60 and 120 are merging and/or SCICOM shares price trade above EMA 20.

- - RSI has become intact and oversold. It is a significant sign which will lead SCICOM shares price to drop to a lower level.

- Resistance R2: RM 1.485

- Resistance R1: RM 1.285

- Support S1: RM 1.075

- Support S2: RM 1.035

 

Fundamental Analysis

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1) Overall Fundamental Performance

2) Market Prospect Ratio

- SCICOM EPS drop significantly from 12.77 cents to 9.06 cent due to lower revenue in Y2018 due to lesser contribution from its core business, Business Process Outsourcing ("BPO")

- Thus, it is a temporary incident and/or permanent business issues which are explained by SCICOM shares price accordingly.

- However, SCICOM is a good dividend payout counter due to it able to maintain a dividend payout ratio in the past 5 years

 

2) Profitability Ratio

 - Due to SCICOM don't hold stock, inventory, land & building, ROA & ROE are higher than typical business model. Thus, we ignore ROA & ROE in our fundamental anaylsis.

- From Profit Margin ratio perspective, we notice SCICOM unable to increase Net Income in recent years. It seen like SCICOM dont have greater bargain power in high competitive market conditions. They need lower their revenue per contract to maintain their competitive.

 

3) Efficiency Ratio

- There is no significant issues in efficiency ratio.

 

4) Liquidity Ratio

- High value in Quick ratio proves stability of financial position and healthy in cash collection allow SCICOM to run daily operation smoothly.

- Furthermore, SCICOM don't have any short-term loans and long-term debt in past 5 years. Zero debt position lead SCICOM to survive better in steep communication enviroment

 

5) Solvency Ratio

- SCICOM able to meet any short-term and/or long-term obligations.

- There is no insolvency sign in SCICOM financial performance.

 

 

 

 

 

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