dunno can break RM 4.30 today.

bonus or share split coming too

if market cap of 1 billion, thong guan should be around RM 7 to RM 8

Ang: The target market capitalisation of RM1 billion is achievable because our company is still growing


SHARES of Thong Guan Industries Bhd are trading near their all-time high of RM3.45 but valuation-wise, the stock is pegged at a price-earnings ratio (PER) of slightly less than eight times.

The region’s leading plastic packaging manufacturer does look appealing, considering its earnings growth and that its peers are trading at double-digit PERs.

When contacted, Thong Guan executive director Alvin Ang See Ming tells The Edge that the demand for plastic packaging products remains “very positive” across the board in every sector and country that Thong Guan is exporting to.

“Japan, our largest market, is still very strong. They don’t expect an increase in consumption tax at least until 2019, so there will be consistent organic growth,” he says.

Demand from Australia remains strong while Asean, Saudi Arabia and the United Arab Emirates are considered as growing markets for Thong Guan.

“The Middle East is looking good because they are rebuilding Iraq, so the growth is quite high there. We are also getting orders from countries like Iran,” says Ang.

Next, the company will expand into post-Soviet states such as Azerbaijan, Georgia and Armenia. At the same time, it is exploring new business opportunities in some African countries.

In the financial year ended Dec 31, 2015 (FY2015), despite a marginal drop in revenue to RM711 million, Thong Guan’s net profit more than doubled to RM38.5 million from RM17.4 million the year before. This was also despite a foreign exchange loss of RM12.75 million. The stellar performance was attributed to wider profit margins from exports, which were mostly denominated in US dollars.

The growth momentum continued in the first quarter ended March 31, 2016 (1QFY2016) — the group’s net profit almost tripled to RM13 million from RM4.6 million a year earlier. On an annualised basis, Thong Guan’s net profit would be RM52 million in FY2016, which would be a record-breaking year.

It is worth noting that the big leap in the quarterly earnings happened despite a foreign exchange loss of RM7.96 million in the quarter under review.

Ang highlights that export-oriented Thong Guan will continue to benefit from the low oil price environment as well as the strong US dollar.

Ang, whose family founded the group, believes that the company deserves better valuations, considering its competitors, which are smaller in size, are trading at much higher PERs.

He opines that once the investors realise the true potential of Thong Guan, it could have a market capitalisation of RM1 billion in three to five years’ time.

“The target market capitalisation of RM1 billion is achievable because our company is still growing. At the moment, the market gives us a very low valuation. If we correct that by 30% and our earnings grow at double digits, we will be there soon,” he says.

Ang, 46, is the son of group managing director Datuk Ang Poon Chuan. He joined Thong Guan in 1993 as an accounts executive before moving up the ranks to become general manager. In 2013, he was appointed to the board.

Based on its trailing 12-month earnings per share of 45 sen, the stock is currently trading at a PER of merely 7.6 times.

In comparison, Scientex Bhd, which is also involved in property development, is valued at a PER of 13.83 times with the highest market capitalisation of RM3 billion. BP Plastics Holding Bhd, which has the lowest market capitalisation of RM287 million, is also fetching a double-digit PER of 11.74 times.

But among its peers, SLP Resources Bhd, despite posting much smaller revenue and earnings, commands the highest PER of 22.18 times, giving it a market capitalisation of RM618 million, about 70% higher than Thong Guan’s.

“In the past, we have been focusing on building the company. But now, we need to promote the company more. It’s not so good to be valued lower than our competitors because we are more mature than many of them. I find it hard to understand. Something is wrong and we need to correct the situation,” Ang says.

Considering that SLP Resources is now trading at a PER of more 20 times, Ang believes that a PER of 15 times for Thong Guan “is not asking too much”.

On the global oil price, which is the key to resin pricing, he also expects it to remain favourable to Thong Guan’s cost of production.

“The shale producers are already making good money at US$50 [a barrel]. Opec (Organization of the Petroleum Exporting Countries) is going nowhere and Russia is in a very bad position, so US$50 will be quite high for them. A lot of wells are coming up in places like Africa, and there is no shortage of oil in the world anyway,” he says.

On corporate exercises, Ang says Thong Guan is considering a share split or bonus issue as tight liquidity has been

eps per year will be around 0.55 to 0.60 cts

going to holland

crashing

i thought it is to sell SCGM and switch to the cheaper TGUAN.

another scientex in the making

1000 lots!

tguan RM 3.85 queue huge volume buy

RM 4.00 easy to reach by today.

mere goreng only...

crashing soon!

AGM passed minimum 30% dividend payout policy.

ah gan.. i dun understand what is the info of Evli?

tguan has the chance to be the next scientex!

target price RM 4.19

cos usd down.. so revenue will drop.

unrealised forex loss of RM 12 millions.

Jan to Mar- USD vs MYR went from 4.20 to 3.80

But Apr to Jun- USD vs MYR went back from 3.80 to 4.20

next quarter profit will fly back again.

inari and gtronic all big shot profit going to drop by 30%, what do you think will happen to dufu? A small competitor in technology sector

all goreng only.. just like eforce

it's coming!

time for export stocks again!

usd vs myr going to hit back to 4.30

Doha- Opec meeting on freeze oil production failed!!!

hopeless stock

heard from management going to push back to RM 1.50

bonus issue coming!

bonus might be coming

this stock need to pay more dividend and bonus

you look at scientex, then you can see the future for thong guan. scientex is no.1, thong guan is no.2

parkson immediately received UMA query by bursa! so obvious. better catch all these peoples

uncle koon the most despicable of all..

he keeps selling.. and now he keeps quiet

still have the cheek to ask ppl to buy said.. vs still a good buy

Koon Yew Yin keeps telling people the drop in USD is not affecting VS by too much, and is still a good buy.

But he keeps selling his export stocks, latitude, vs, pohuat and liihen.

Big crocodile..

only Fong Siling is the true value and long term investor.

He always keep quiet.

Koon Yew Yin said he wanted to teach people how to buy stocks, but i think he is cheating himself. He just want to create and advertise. Maybe he think he is a saint, but he is not. When people discover what he has done after he promote his stocks.

koon yew yin sold all..

He is not a real investor and long term value investor.

He loves to buy in push the price up, then sell it all..

He got big capital.. of cos easy for him to push.. pity those small shareholders.

He still say many people laughing all the way to the banks. now crying all the way to the graveyard.

We think the stock’s recent sell down due to risk-off sentiments on exporters has been overdone.

VS Industry has clear earnings drivers as it sees growing orders from existing/new customers. We opine its recent 12.1% stake acquisition in Seeing Machines could also open up potential business opportunities should future strategic collaborations occur. Maintain BUY, but lower TP to MYR1.68 (from MYR1.81, 33% upside) as we take into account a slight delay in the production start of a new prototype coffee brewer. An interim 0.8 sen dividend was declared, bringing YTD total dividend to 2.3 sen (1HFY15: 1.2 sen).

hevea definitely oversold.. if based on recent performance eps 6 cts. let's calculate based on 4.5 cts, 1 year eps 18 cts, still cheap.

Somemore we have to think the next 2-3 yrs trend is US Fed reserve going to increase rates, money will slowly all flow back to US. USD will increase

oil palm price RM 2,700

friends, you look at myeg profit margin is almost 50%, what do you think?

no need to do.. just waiting to feed.

hopeless

well said

http://www.theedgemarkets.com//my/article/palm-oil-jumps-dry-weather-seen-slashing-global-output

KUALA LUMPUR: Malaysian palm oil futures will climb nearly 20 percent to around 3,000 ringgit a tonne as dry conditions brought by the El Nino weather pattern curb output in major producers Indonesia and Malaysia, said top industry analyst Dorab Mistry.

well said!

leslieroycarter...

he is no longer substantial shareholder..

no need to disclose now

he himself think he is like a saint. but in fact he is not.

Latitude RM 7.00 he keeps ask people buy.. Even come out with a blog.

I trust that recent latitude heavy selling he sure sell a lot. If not, he can show us his transaction history for the past weeks.

He is almost like the top 5 shareholders of latitude. The rest normally dun sell because they are major shareholders and holding the company. Only he will sell..

uncle koon is not a real investor..

he just like to push the price up and sell even if the profit is still doing well..

As long as he is earning.. pity all the minority shareholders

usd vs myr still 4.12

this stock is overvalued.. most other export drop 30% to become cheap. This stock never drop

Oil Prices Should Fall, Possibly Hard 07 Mar 16


Oil prices should fall, possibly hard, in coming weeks. That is because fundamentals do not support the present price.

Prices should fall to around $30 once the empty nature of an OPEC-plus-Russia production freeze is understood. A return to the grim reality of over-supply and the weakness of the world economy could push prices well into the $20s.

Saudi Arabia's Minister of Petroleum & Mineral Resources Ali Al-Naimi speaks at the annual IHS CERAWeek global energy conference Tuesday, Feb. 23, 2016, in Houston. (AP Photo/Pat Sullivan)
Saudi Arabia’s Minister of Petroleum & Mineral Resources Ali Al-Naimi speaks at the annual IHS CERAWeek global energy conference Tuesday, Feb. 23, 2016, in Houston. (AP Photo/Pat Sullivan)

A Production Freeze Will Not Reduce The Supply Surplus

An OPEC-plus-Russia production cut would be a great step toward re-establishing oil-market balance. I believe that will happen later in 2016 but is not on the table today.

In late February, Saudi oil minister Ali Al-Naimi stated categorically, “There is no sense in wasting our time in seeking production cuts. That will not happen.”

Instead, Russia and Saudi Arabia have apparently agreed to a production freeze. This is meaningless theater but it helped lift oil prices 37% from just more than $26 in mid-February to almost $36 per barrel last week. That is a lot of added revenue for Saudi Arabia and Russia but it will do nothing to balance the over-supplied world oil market.

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The problem is that neither Saudi Arabia nor Russia has greatly increased production since the oil-price collapse began in 2014 (Figure 1). A freeze by those countries, therefore, will only ensure that the supply surplus will not get worse because of them. It is, moreover, doubtful that Saudi Arabia or Russia have the spare capacity to increase production much beyond present levels making the proposal of a freeze cynical rather than helpful.

Chart-US-RUSSIA-SAUDI Incremental Prod MAR 2016
Figure 1. Incremental liquids production since January 2014 by the United States plus Canada, Iraq, Saudi Arabia and Russia. Source: EIA & Labyrinth Consulting Services, Inc. (click image to enlarge)

Saudi Arabia and Russia are two of the world’s largest oil-producing countries. Yet in January 2016, Saudi liquids output was only ~110,000 bpd more than in January 2014 and Russia was actually producing ~50,000 bpd less than in January 2014. The present world production surplus is more than 2 mmbpd.

By contrast, the U.S. plus Canada are producing ~1.9 mmbpd more than in January 2014 and Iraq’s crude oil production has increased ~1.7 mmbpd. Also, Iran has potential to increase its production by as much as ~1 mmbpd during 2016. Yet, none of these countries have agreed to the production freeze. Iran, in fact, called the idea “ridiculous.”

Growing Storage Means Lower Oil Prices

U.S. crude oil stocks increased by a remarkable 10.4 mmb in the week ending February 26, the largest addition since early April 2015. That brought inventories to an astonishing 162 mmb more than the 2010-2014 average and 74 mmb above the bloated levels of 2015 (Figure 2).

Crude Oil Stocks_5-Year AVG MIN MAX 6 FEB 2016
Figure 2. U.S. crude oil stocks. Source: EIA and Labyrinth Consulting Services, Inc. (click image to enlarge)

The correlation between U.S. crude oil stocks and world oil prices is strong. Tank farms at Cushing, Oklahoma (PADD 2) and storage facilities in the Gulf Coast region (PADD 3) account for almost 70% of total U.S. storage and are critical in WTI price formation. When storage exceeds about 80% of capacity, oil prices generally fall hard. Current Cushing storage is at 91% of capacity, the Gulf Coast is at 87% and combined, they are at a whopping 88% of capacity (Figure 3).

Cushing & Gulf Coast Inventory & Utilization 6 Feb 2016
Figure 3. Cushing and Gulf Coast crude oil storage. Source: EIA and Labyrinth Consulting Services, Inc. (click image to enlarge)

Prices have fallen hard in step with growing storage throughout 2015 and early 2016. Since talk of a production freeze first surfaced, however, intoxicated investors have ignored storage builds and traders are testing new thresholds before they fall again.

The truth is that prices will not increase sustainably until storage volumes fall, and that cannot happen until U.S. production