FY21 CNL of RM18.6m came far below our expectation due to a fire incident which affected order fulfilment. No dividend as expected. We cut our FY22E CNL to RM9.2m and introduced FY23E CNL of RM7.5m. Due to lack of investors’ interest and challenging prospects, we transfer TOMYPAK from our coverage to “On Our Radar.” Consequently, the stock is assigned a Not Rated (from UNDERPERFORM) with our last TP of RM0.195.

Below expectation. FY21 CNL of RM18.6m came far below our expectation of CNL of RM0.4m. The results mainly came in lower due to a fire incident on 19 December 2021. No dividends, as expected.

YoY, FY21 revenue fell 7% to RM143.4m due to a fire incident which destroyed finished goods and WIP with a total of RM17.5m in order-book, thus rendering it unable to deliver the orders. Taking impairment loss due to the fire incident of RM105m, TOMYPAK recorded a CNL of RM18.6m.

QoQ, 4QFY21 revenue and CNL saw a dip, by 47% and 190%, respectively, similarly due to the aforementioned reasons.

Outlook. On 19 December 2021, fire broke out at TOMYPAK’s Senai factory and destroyed assets and inventories amounting to c.RM180m. TOMYPAK highlighted that it has insurance coverage of RM80m for the business interruption and up to RM271m for the property damage and stock in trade. The group has currently developed a 3-Phase Business Recovery Plan (“BRP) targeting commercial operations to commence in 4QCY22.

Post results. We cut our FY22E CNL to RM9.2m due to: (i) lower sales as it is unable to operate and deliver most of the orders, and (ii) slower recovery from fire incident. We introduce FY23E CNL of RM7.5m.

Ceasing Coverage to On Our Radar. Due to the lack of interest and challenging prospects, we are ending active coverage on TOMYPAK to “On Our Radar”. We continue to use BVPS as our valuation basis as TOMYPAK seems unable to sustain its profitability. Thus, the stock is assigned a Not Rated (from UNDERPERFORM) with our last TP of RM0.195 based on FY22E BVPS of RM0.13 at 1.5x PBV, at -1SD below the 5-year mean.

Source: Kenanga Research - 1 Mar 2022