• Company profile . Public Packages Holdings Berhad (PPHB) is engaged in the manufacturing and retailing of corrugated cartons, packing materials, gift and display box. Also, PPHB is involved in the trading of paper products, design and sale of paper. The group offers JIT (Just-In Time) services, total packaging concepts, designing and supply chain management services.

• Growing earnings, in tandem with stable revenue growth. Despite a steady revenue growth of 3.5% CAGR over the past four years, EPS rose at a faster pace of 12.7% CAGR in the corresponding period. This was due mainly to higher economies of scale and cost cutting measures implemented throughout the same period of time. With the EPS of 15 sen in FY2016, valuation is undemanding with P/E standing at 6.7x, below the industry average of 14.7x. A low P/B ratio of 0.6x adds on to the attractiveness of PPHB.

• Technical outlook. Weekly chart has formed a rounding bottom formation, with recovering weekly indicators – suggesting a potential breakout above RM1.01. Meanwhile, on the daily chart, it formed a gap up candle, coupled with higher-than-average volumes. We can expect follow-through buying interest to emerge, with target price levels envisaged at around RM1.04, RM1.10 and RM1.16. The supports will be set around RM0.955-RM0.97, with the cut loss level at RM0.93.

Source: Hong Leong Investment Bank Research - 7 Mar 2017