Thong Guan - Hidden Diamond

Thong Guan - Hidden Diamond

Wonder88
Publish date: Fri, 22 Apr 2016, 02:49 PM
Wonder88
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Thong Guan

I will not write the company history for Thong Guan, since already published by YiStock on 27th Dec 2015, http://klse.i3investor.com/blogs/thongguan/88654.jsp

Hence, will straight away to do the comparison between the quarter performance for year 2014 and 2015.

A)Quarterly performance

a)Plastics Product

 
 

2015

2014

Var

%

in mil

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Revenue

148

161

171

183

166

184

182

157

-18

-23

-11

26

-11%

-13%

-6%

17%

Profit

2.4

7.4

12

18

9.0

8.0

4.1

-4.2

-6.6

-0.6

8.0

22.6

-0.7

-0.1

2.0

5.4

1)The decrease in Q1 15 profit

a)decrease in export volume

b)losses suffered at the group’s China based operation

c)realized and unrealized foreign exchange losses

2)The  decrease in Q2 15 profit

a)Lower Profit contribution from its Japanese customers

3)The increase in Q3 15 profit

a)higher profit contribution from its stretch films and industry bag division

b)China based operations had also turned profitable

4)The increase in Q4 15 profit

a)Mainly due to higher margin contributed by export sales which mostly denominated in USD

 b)Food and Beverages

 

 

2015

2014

Var

%

Im mil

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Revenue

10.9

11.3

11.2

12.4

11.4

11.3

9.9

9.7

-0.4

0.0

1.3

2.7

-4%

0%

13%

28%

Profit

1.33

1.08

0.67

-0.28

0.91

1.04

0.31

-0.33

0.42

0.04

0.36

0.05

46%

4%

117%

16%

 

1)The increase in Q1 15 profit

a)higher margin recorded by tea product

2)The increase in Q3 15 profit

a)hgher margin from tea and  coffee product

3)The increase in Q4 15 profit

a)Its  newly acquired noodle making subsidiary company start to contribute revenue in Aug 2015

b)higher margin from tea product

B)Prospect from  Q4 15 Report

 

From above Q4 15 report

 

1)       The 33-layer  nano technology stretch film line was commission in early 2016. Marketing efforts has been intensified and order book is promising

2)       The group has also taken delivery of  its German made 5-layer blown film line which is expected to immediately contribute to revenue in the next months.

C)US Vs RM

2014

2015

2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Jan-Mar

April-June

July-Sept

Oct-Dec

Jan-Mar

April-June

July-Sept

Oct-Dec

Jan-Mar

April-June

July-Sept

Oct-Dec

3.2923

3.2396

3.1962

3.3691

3.6196

3.666

4.0322

4.2937

4.2006

 

 

 

NA

NA

NA

NA

10%

13%

26%

27%

16%

 

 

 

From the above table,  the RM Vs US still depreciated by around 16% in the Q1 16. Can the Thong Guan benefited from foreign currency exchange rate?

D)Crude Oil Price

2014

2015

2016

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Jan-Mar

April-June

July-Sept

Oct-Dec

Jan-Mar

April-June

July-Sept

Oct-Dec

Jan-Mar

April-June

July-Sept

Oct-Dec

101.6

102.1

95.4

66.9

48.9

59.6

46.8

41.3

31.6

 

 

 

NA

NA

NA

NA

-52%

-42%

-51%

-38%

-35%

 

 

 

Since the Crude Oil price hover around USD31.6 in Q1 16, it is for sure benefit to Thong Guan, which manufacture plastic product like stretch film, industry bag, etc

E)Summarization

a)Plastic

1) China based operations had  turned profitable Q3 15

2) The 33-layer  nano technology stretch film line was commission in early 2016

3 The group has also taken delivery of its German made 5-layer blown film line which is expected to immediately contribute to revenue in the next months.

4)Crude Oil price hover around USD31.6 in Q1 16

5) Higher margin contributed by export sales which mostly denominated in USD

b)Food & Beverages

1) Noodle making subsidiary company start to contribute revenue in Aug 2015

Based on above analysis, can we conclude that Thong Guan will have fanstatic 1st Q 16 quarterly report. Let us wait for the day to come., Cheers!

Note :

1)Base on fundamental analysis, Current price, RM3.15  is fair value

2)Two of Top 30 Largest share Holder

a)        Dynaquest Sdn Bhd – Dr Neoh Soon Kean

b)       Cold Eye – Fong Siling

3)Technical Analysis – Symmetrical Triangle

4)This is not a buy or sell call, please buy on your own risk.

Appendix I

i)Fundamental Analysis

Return on Assets

:

7%

>5%

 

    

 

Return on Equity

:

10.2%

>15%

 

    

 

Price Earning Ratio

:

8.4

<10

 

    

 

Price/Book Value

:

0.8

<1.5

 

    

 

Market Cap/Cash Flow fr Operating

:

4.1

<10

 

    

 

Enterprise Value/Earning B4 Int & Tax

:

6.7

<7

 

    

 

Earning Yield (after Tax)

:

14%

>12%

 

    

 

P/FCF

:

5.9

<20

 

    

 

Enterprise Value/Revenue

:

0.4

<1.0

 

    

 

Market Cap/Revenue

:

0.47

<1.4

 

 

 

 

 

 

 

 

 

 

TGUAN (7034)
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Discussions
4 people like this. Showing 5 of 5 comments

stockmanmy

this share got no interest. no volume. Cannot buy unless with insider information.

as for the triangle, it can shoot up or shoot down if results disappoint.

2016-04-22 15:04

Wonder88

Agreed with low volume, since the outstanding share only 105.27 mil. Market Cap is 333.71 mil. Most of the Boss hold tight to the share, two of the top 30 largest and well known share holders are
1)DynaquestSdn Bhd - Dr Neoh Soon Kean
2)Cold Eye - Fong Siling
It is a good company with expansion by
1)Acquired Noodle Company - Everprosper Sdn Bhd which start contribute since Aug 15
2)Install new high tech machines, again going to contribute in 1st Q 16
Besides that,
1)China Based operations turn around since 3rd Q 15
2)Crude Oil Price still hover around US31.6 in Q1 16
Can the 1st Q performance (around end of May) far better than 1st Q 15 with above contribution. Should with buy with fair value and keep or chase after the price.
Let us wait and see, cheers!

2016-04-22 17:01

paperplane2016

Yes, my sifu love this company.

2016-04-22 17:53

casperl

decision of diamond or crystal by this week?

2016-04-25 09:52

kenteh123

at current price I think it is fairly valued by the market. Will BP Plastic be a better alternative?

2016-05-01 11:41

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