About a quarter ago, we posted this report on TGUAN where we talked about the positives and the period had begun to start accumulating when the stock weakens. It seems though with the latest quarterly results, we are looking at gains from this conviction.

Here’s a quick review on things.

First off, a slight dip in revenue compared to November’s quarter but profits remained strong with the US Dollar factor as we had determined from our previous report. F&B segment is still a drag and we felt that it is better to be sold off rather than running it.

The latest nano-layer stretch film remains as one of the primary growth catalysts for their main plastics related business. We see that the installation of a third nano-layer stretch film line would remain positive for the company in the longer term.

On the negative side of things, the additional line for their third nano-layer stretch film might not add into the company’s revenue instantly from next quarter onwards. Proven by the lackluster response from revenue growth from the latest results, we felt that the resources from the additional line might end up redundant in the near term.

Out of the 5 points we proposed earlier, we believe that that main point stressing about additional capacity has yet to be fulfilled. This meant that the potential of a higher revenue growth is still in place.

Volatility of the Ringgit is still a concern for now. We would stop our buy recommendation at this price but feel free to buy RM 2.50 and below!

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