Background and Core Business

SLP Resources Bhd. (SLP) is a holding company which was listed on 2008. Through their wholly owned subsidiaries, Sinliplas Holding Sdn Bhd, Sinliplas Greentech Sdn Bhd and Sinliplas Sdn Bhd, the group is a major player in the manufacturing of plastic packaging products.

The company first started its humble operations circa 1989 and manufactured mainly Mizukiri bags (basically bottom perforated drainage bags for kitchen use) for export to Japan. In the 90’s, SLP collaborated heavily with Japanese companies in terms of technology transfer and this led to expansion of their machinery and production capacity at the turn of the century. The group achieved major milestones after that by penetrating into many overseas markets i.e. Norway, U.K, Australia, Denmark, Germany and also emerging markets such as Indonesia and Thailand.

As it stands today, SLP’s products are divided into 2 major categories i.e. Polybags and Polyfilms. Polybags include garbage bags, kitchen bags, slit seal bags, fashion shopping bags, hygienic packaging bags etc. Polyfilms on the other hand are used mainly for wrapping and packaging, both for domestic and industrial use. SLP prides itself for being at the cutting edge of polyfilm R&D and manufacturing with ultra-thin yet durable films.

Market capitalisation for SLP is about RM742 million, and it is categorised under the Industrial Products and Fledgling Indices. The group’s FY ends 31^st December 2016 and they are in their 3^rd quarter currently. Announcement for their Q2 result should be due in August 2016.

Financial Brief and Ratios

SLP Resources Bhd is the epitome of a successful growth company. It has registered year after year of steady revenue growth, not to mention increasing profit margins. This has translated into increasing EPS, and the most recent explosive growth in EPS was seen in FY2015 when it increased by 124% from the year before. This is not surprising as being an exporter to overseas markets SLP was a beneficiary of the weakened Ringgit.

PER is as expected for a growing company like SLP.  ROE also conforms to the growth and profitability picture of SLP. Shareholders were rewarded with a Dividend Yield of 1.5%.

SLP has a pretty healthy balance sheet, with little to no debts. They are positively geared. Cash flow is also positive and the group had seen their highest cash flow from operations in FY2015.

It has been nothing but good news for SLP from the fundamental aspects and the stock hit its historical high of RM3.10 recently. All these could have been factored into the share price already. Let’s move on to what iVSA Chart can tell us.

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

·      This is the weekly chart for SLP Resources for the past 6 months

·      Signs of Strength (green arrows) were picked up in late March to April 2016 suggesting that strong hands accumulation over months of consolidation

·      Mark up of prices began around early May 2016 with previous resistance of RM2.40 taken out

·      The Sign of Weakness (red arrow) on first week of July accompanied by low volume hinted at profit taking activities after reaching a psychological price level of RM3.00 and also overhanging supply

·      The next 2 weeks saw strong hands absorbing the overhanging supply with accompanying surge in volume

·      Overall the uptrend is still intact provided there is no further hidden selling detected and supported by good quarterly results

·      Price volume action this week could hint at some retracements or sideways movements in the following bars.

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