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HIDDEN GEM 2021

Author: swimwithsharkss   |   Latest post: Wed, 16 Jun 2021, 2:30 AM

 

Why Has the Founder of Thong Guan Joined This Company?

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Thong Guan Industries Berhad (TGUAN) has been a giant in the packaging industry with the more-than-solid fundamentals and growing profitability. One would think that the management for this company is capable of doing great things – so that they could grow TGUAN to what it is today, right?

 

Interestingly, in October last year, the founder of TGUAN – Mr. Alvin Ang had joined this company – Techfast Holdings Berhad (TECFAST) as an independent and non-executive director.

 

 

 

But why? What does a founder from a packaging giant wants from this E&E company?

 

I believe he joined the company for their expansion plan into the oil bunkering business. To recap, TECFAST was involved in the manufacturing of self-clinching fasteners, electronic hardware and precision turned parts, as well as LED epoxy encapsulant materials. However, due to advancement of technology and obsolete of certain electronic items coupled with raising competition from China, the demand for TECFAST’s products is deteriorating.

 

Hence, the management of TECFAST had disposed two of the companies who contributed up to 20% of revenue of the group to harden their interest in the oil bunkering business.

 

There are several articles on the forum that talks about oil bunkering outline of TECFAST, so I’m not going to bore you with the same information.

 

 

 

Chart wise, the recent price movement of the company does not look healthy. It appears that the recent announcement of rights issue and corporate exercises had scared off investors. But to me, this might not be the case.

 

 

 

In this announcement dated 14th April 2021, the company had announced to have a subdivision (similar to bonus issue) of shares for every 1 share for another 1. In short, the share price will be split in half. At the time of which I’m writing this piece, TECFAST is trading at RM 0.320 per share.

 

Pursuant to the ACE Market listing requirement, the company would need to maintain or make sure the share price to be at least RM 0.200 after dilution. But at the current situation, TECFAST is unable to split the shares and complete the rights issue for the expansion of the oil business. Do you know what does this means?

 

To complete the rights issue, TECFAST, at the bare minimum would need to maintain the share price at RM 0.400.

 

Now, I suspect they are clearing out weak holders of TECFAST.

 

 

 

From chart wise, we could see that despite price is dropping hard, the volume is relatively low. This could be the panic selling of retailers.

 

Personally, I think the acquisition of CCK Petroleum would help TECFAST to grow bigger in the future. If you have the holding power, this is the perfect chance to chip in for TECFAST! You might not want to miss out a multi bagger that has been underestimated by the general market!

 

Be greedy when others are fearful, and be fearful and when others are greedy – Greatest Investor in the World.

 

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Labels: TECFAST

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Chart Stock Name Last Change Volume 
TECFAST 0.29 0.00 (0.00%) 1,609,500 

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