Magni-Tech is one of the counters that catches my heavy attention. Aside of playing its role as packaging business, the group further ventures into garment manufacturing industry as well. A combination of both decreases the risk of company from enduring too much risk. Looking in deeper, packaging business has accounted for 20% of the group's revenue where most of the businesses' clients are venturing in non-cyclical business such as food, healthcare and beverage. Thus, it ensures that the company will generate a portion of steady revenue. As for the garment manufacturer segment, most of its revenue is generated from export markets. Different from other garment manufacturer, Magni-Tech doesn't emphasize on marketing and building the brand of its product. Instead, it fill up orders for garment trading companies who wish to outsource their production line. Thus, Magni-Tech itself is more on business to business transactions. With an average annual capital expenditure of RM5 million(it is barely about 1% of the total revenue), the amount is minimal enough as it is spent for increasing the company's operation efficiency rather than continuous innovation for survival purpose which is a good thing.

As the company generates big amount of its revenue overseas, this exposes the company to a very high foreign exchange loss. ( I don't do the Maths but based on news about Malaysia Ringgit's depreciation in 2013& 2014 2^ndquarter, it is scary enough to estimate it.) Also, instead of the company's ability to cushion its impact in case of global financial crises, its garments sectors are still depending on the international market on a large scale. Finally, its vulnerability is further defined by its holding of investment securities (not subsidiary and associate, just mere investment purpose) is worth a whopping RM22 million which is about 25% of its total fixed assets. I'm not saying the company is a speculator, but with such an amount of investment with the company's nature (as garment& package manufacturer and trader), the risk is there.

With its 10 years operating cash flow, things are looking good as the company undergoes a healthy upward trend. Returns on asset and equities surpass the bench mark of 7 and 15% respectively. For 6 consecutive years, no drawdowns of loan have been made (This is remarkable as it includes 2008& 2009). Up to date, no short term and long term loans are recorded in the company's balance sheet. What's more is the company cash reserve is positioned at RM50 million (as at 2013 April 30). It is currently priced at RM2.70, compared to its intrinsic value of RM2.4( I set the margin of safety 25% for the risk I've mentioned). It is slightly overprice but still itis a counter full of potential.