Johore Tin Berhad is engaged in the business which can classify under 3 business segments (1) food and beverage, (2) tin manufacturing, (3) investment holding. Most of the people are confusing because of the company name of "tin". Based on the financial report, around 80% of the revenue is generated from the F&B segment (milk powder and dairy products). Johotin is successfully diversified into F&B segments, and now management's directions also focus more on the milk powder manufacturing.

Share price started press down to 1.30 level after announcement of Q2 result. In fact, the Q2 sales RM123m (quarterly basis) are the highest achievement since Johotin operate their business. But, one off allowance of doubtful debt caused the lower PBT in Q2 result.

Statement is not stated clearly about the doubtful debt. If we deem it as provision, there is a possibility to reverse out or partial reversal in the next 2 quarter. Why I said so? If you refer to the first half PBT result, actually the PBT is much better than last year, 1H17 RM17.2m vs 1H16 RM13.8m, although part of RM3m profit in 1H17 is due to disposal of machinery and forex gain. My concern is management may intended to reduce the risk and make such provision as reserve of profit in the coming next 2 quarter. In accounting wise, this is one of the strategy company may apply it since the 1H17 result is meet the expectation.

Other than above, actually Johotin is remains with positive outlook as breakdown belows;

1) Growth opportunities in the milk powder segment as well as the American Continent from new joint venture in Mexico.

2) Low PE for Johotin after classified under consumer sector (PE below 10, normal consumer sector average at PE15). Although warrant going to maturity, but around 60% of share has been converted into mother share, and the impact to PE is not that much. Remaining warrant only left 25m of share yet to convert.

3) Continue weakening of MYR. Most of the products for Johotin are export to the oversea and this will benefit to end results with strong USD currency.

4)Utilized the tin manufacturing for the F&B segment, integrated production line plus the expansion of production capacity.