Background and Core Business

Oceancash Pacific Bhd was listed on 20^th July 2004 under the FBM ACE Index. The company is categorised in the Textiles Industry. Prior to its listing, the company started off in 1996 as a commercial manufacturer of felt products and later non-woven products circa 2000. 

Felt products consist of Thermoplastic and Resinated types, both manufactured under their subsidiary Oceancash Felts Sdn Bhd. These felts are used for noise and heat insulation, mainly in the automobile and building industries. One of their main customers is Perodua. Manufacturing of these felts now take place in Malaysia and Indonesia. They have also set up a trading company based in China. Export markets for felt products include Thailand, Taiwan, Philippines, Indonesia and China.

Its other subsidiary, Oceancash Nonwoven Sdn Bhd is responsible for the manufacturing of non-woven fabrics. These materials are used widely in disposable hygienic products such as diapers, sanitary napkins and even surgical gowns, masks and caps.  Manufacturing takes place locally and they currently have a total of 5 production lines running, with an annual capacity of 8,000 metric tons.  They export non-woven fabrics to Indonesia and Japan.

Oceancash Pacific Bhd currently has a market capitalisation of RM 97 million. The financial year ends on 31^st December 2016 while the next quarterly announcement (2^nd quarter) would be due around August 2016.

Financial Brief and Ratios (Historical)

The company has seen positive revenue growth over the past 5 years but not in a progressive manner. Highest rate of revenue growth was seen in 2013 at 16%. Subsequent years had only registered single digit revenue growth.

In 2015, Oceancash achieve its highest net profit margin for the past 5 years at 11%, in line with its highest revenue thus far. EPS stood at RM0.04 in 2015, up from RM0.02 in 2013 and 2014 respectively. Highest Return on Equity achieved by the company so far has been around 13%.

In terms of valuation, PE ratio is comparatively low for a growing company like Oceancash Pacific Bhd. It started rewarding its shareholders in 2014 with dividends, but companies like these are favored more for their growth potential rather than dividend income.

The cash ratio stands at 0.478, as the company is currently utilising cash for capital expenditure during these past couple of years, resulting in negative free cash flow in 2015.  Moving forward, this could translate into further growth for the company in the future. Balance sheet on the other hand is still healthy with very low debts.

iVolume Spread Analysis (iVSA) & comments based on iVSAChart software – Oceancash

·      This is 1-year weekly chart dating back to June 2015

·      Technically the stock has been trading in a more or less sideways range for the past one year

·      Support is pegged at around RM0.30 and resistance at approximately RM0.50

·      Strong hands emerged during the two weeks ending 28^th August and 4^th September 2015 as shown by the Sign of Strength (green arrows) with prices rallying to a high of RM0.50 in the week ending 15^th January 2016

·      Buying interests seems to re-emerged at about RM0.38 around March to May this year but there is absence of upward follow through

·      With overall bearish market in the background, Oceancash closed this week at a 6-month low of RM0.335 under relatively light volume and may find support around RM0.30

·      Absence of Signs of Strength from now on could see the stock price falling under its own weight or at best moving sideways

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