Art of Investments


Publish date: Wed, 23 Feb 2022, 01:06 PM

The name of the company is Tomei.

Tomei released their 4th quarter results yesterday which was the best ever results in their history. Here's a screenshot of their historical performance:


The management attributed this strong results to their "aggresive marketing effort" and the reopening of the economy after MCO 3.0 was lifted. 

Traditionally, Tomei's strongest quarter is the 1st quarter with the Chinese New Year festival. As such, we can definitely expect next quarter to have even stronger revenue and profit. Also worth noting in the 4th quarter's results is the RM1 million gain that Tomei earned from the changes in gold price. According to the gold price history, the price of gold went up by just USD29/oz from an average of USD1781/oz in 3rd quarter of 2021 to USD1810/oz in the 4th quarter of 2021. After the Russia-Ukraine issue which brought the country closer to war, the price of gold has shot up to USD1900/oz now. Tomei will surely gain from their gold inventory.

How to value Tomei? Tomei hit a peak of RM1.49 in May 2021 when they reported RM13.8 million in profit in the 1st quarter. At that time, gold price also reached the levels seen now. However, back then in May 2021, there was no threat of war. With war, there will be a rush to secure gold since all other assets have the potential to decline in value. With the record high earnings Tomei has achieved and with the threat of war now, Tomei is definitely worth more than that peak of RM1.49. The balance sheet shows that Tomei has over RM0.4 billion in inventory as seen below:


I am not sure how much of this is gold but it should be very significant. Another interesting development is that Tomei recently received approval from the Securities Commission to spin-off its subsidiaries which are involved in gold jewellery. The proposal is to list those subsidiaries on the Ace Market. There are no details yet on how many shares Tomei shareholders will receive in the new listed company or if the reward will be in the form of special dividends but the timing of this spin-off will not get better than this.

Tomei not only has extremely strong earnings but it will also protect investors if there is a war. At RM1.03 now, it is definitely a matter of time before the share price increases significantly.


Update: As of 2.30pm 24 February 2022, this stock has done exactly what I expected it to do. In this case, to protect. From the share price of RM1.03 when I posted yesterday to RM1.18 now, it has gone up by 15%. After reading the news about the Ukraine war, it is quite clear to me that no other country is willing to provide military help to Ukraine. Europe and US is only talking about sanctions, not defending Ukraine using their military. As such, I expect the "war" to involve some fighting and bombing but Ukraine will be overpowered easily like how Afghanistan was and this will cause the price of gold to retrace. When this happens, share price of Tomei will retreat and I suggest to take profit at these levels. However, sanctions will cause disruption to oil supply and I will be switching over to Hibiscus.