• Business profile. Malaysian multinational conglomerate that comprises four diverse business Divisions with operations that span across the ASEAN region and China:
  • Industrial division (contributing 40% of the total revenue) is currently a regional leader in the marketing, sales and distribution of industrial raw materials and an established manufacturer of textile auxiliaries and chemicals and an one stop analysis solutions provider on laboratory services;
  • Polymer Engineering division (contributing 19% of the total revenue) is one of Asia's leading polymer engineering solutions providers with fully integrated design, tooling, production and R&D capabilities housed within thermoforming and injection moulding manufacturing facilities;
  • Food division (contributing 21% of the total revenue) runs fully integrated seafood operations and exports seafood products including frozen seafood, fresh seafood, value-added seafood, Surimi-based products and fishmeal to international market; and
  • Restaurant division (contributing 20% of the total revenue) operates a range of restaurant brands catering for diverse market segments including, Sushi King, Miraku, Waku Waku, Goku Raku and Tim Ho Wan.
• Expansion plan on restaurant division. Despite restaurant division only contributed 20% of the group’s total revenue, its pre -tax profit margin stands at 11% (the highest margin among all divisions) based on 1QFY15. Therefore, management plans to grow Sushi King outlets from existing 90 to 102 outlets in 2015; targets to open 6 more Yoshinoya Hanamaru outlets in 2015 (vs. existing 1 outlet in Mid Valley); and plans to open 3rd Tim Ho Wan outlet in 2015.
• Resumption of long-term uptrend following recent retracement. After 22% retracement from RM1.79 on 17 Mar 2015 to RM1.39, the stock entered into accumulation phase, as indicated by narrowed Bollinger band. However, Bollinger band opened wider yesterday with a white candlestick, indicating strong buying momentum picking up pace. Coupled with MACD, RSI and Slow Stochastics gaining strength, we are targeting RM1.75 and RM1.83, with long term target price of RM1.98. Immediate support is RM1.59 and RM1.54. Cut loss below RM1.50.

Source: Hong Leong Investment Bank Research - 12 May 2015