Posted by kcchongnz > Jun 8, 2013 06:02 PM

Is Thong Guan a good company? Is it a good investment? 

Posted by faberlicious > Jun 7, 2013 08:09 AM | Report Abuse 
bro kcchong, I'm looking at Tguan which looks cheap in terms of PER but not sure if it is a good company to invest in. I'd appreciate it very much kc if you take a closer look at it . 

Thong Guan Industries Berhad is principally engaged in trading of plastic and paper products. The Company's business segments include plastic products, food and beverages, and consumable products and machinery. It carries its operations in Malaysia and China. 

Faberlicious, don't know too well about Thong Guan but looking at its business, I think it is a ok business. TG was doing quite well before the sublime crisis in its growth and profitability. It was hit quite hard during the crisis. Since then it has recovered nicely with revenue growing rapidly in double digits albeit with much slower growth in profit especially for last year at just 1% for shareholders. 

Operating efficiency wise it is ok with ROE and ROIC at about 10%, closed to the cost of equity and total capital. 

So personally I would rate Thong Guan as a slightly above average company. As investment wise, yes, it is very cheap and hence could be an excellent investment. Below is my assessment: 

Thong Guan a Good company? 1.640
Good governance ?
Durable business Yes
Growth Yes
ROE ok 11% close to 12% 
ROTC ok 9.6% about WACC 
Balance sheet Yes D/E 0.2 
Cash flow Yes good CFFO/NI>100% 

Screens for investing
ROTC ok 10% about WACC 
P/B Yes 0.7 <2.0 
PE ratio Yes 6.3 <20