7034 TGUAN had released its Q1 2021 quarterly report on 27-May-2021, which is the best quarter for TGUAN so far, with all time high revenue and net profit recorded. For record TGUAN is one of the stock that I bought in when I was just started back in 2013, and I've been keeping it since then. Let's look into the detail of the QR.
7034 TGUAN Q1 2021 report
Full announcement here:
https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=214407&name=EA_FR_ATTACHMENTS
Snapshot:
As you can see above, an all time high revenue of RM 282.14 mil and net profit on RM 21.77 mil at net profit margin on 7.71%. It's great to see that the rising resin price has not affect TGUAN's net profit margin compared to Q1 2020 when the resin price was way lower than now. Net profit grows around 25% YoY, are we expecting a 25% growth for FY2021? I certainly hope so.
As of Q1 2021, TGUAN is sitting on RM 285 mil of cash, a -2.74% decrease, with total borrowings at RM 157 mil. This translates to a net cash position of RM 128 mil. Receivables and payables remains more or less the same.
As of Q1 2021, TGUAN recorded a negative RM 8 mil cash flow, due to a significant reduction in net cash generated from operating activities. I'm not too worry about that at the moment.
Company's review on Q1 performance:
Company update on the future prospect:
My personal takeaways on TGUAN's Q1 2021 report and also the livechat with Mr. Alvin Ang, executive director of TGUAN:
1. TGUAN definitely exceeded my expectation with the all time high revenue and net profit recorded for this quarter. The rising resin price has not affected the net profit margin yet. It's also good to see the F&B segment recorded encouraging growth in revenue and net profit this quarter. Kenanga also reported TGUAN is able to increase its ASP amid the rising resin price which shows resilient demand for TGUAN's products.
Link:
2. The updates for the new production line is within expectation. As mentioned in the QR, three new factory building is expected to be completed this year. According to Mr. Alvin Ang through the zoom live chat with Kenanga, 2 premium stretch film lines will be install in July and end of this year; 2 more lines in 2022 and 1 more line in 2023. TGUAN also plan for 2 premium blown film lines each year from 2021 until 2026, with total 10 lines to be installed in the new factory. The high margin courier bags lines are ready to be commissioned in June 2021. All these will have a positive contribution to the top and bottom line of TGUAN in the future. Below is the new 16 acre factory complex:
Left: Courier Bags lines (Commissioning in June 2021)
Right: Premium Stretch Film lines (1 line running now)
Empty Space: Premium Blown Film Lines (2 lines by end of 2021)
3. Positive updates from Myanmar development. According to Mr. Alvin Ang, the Myanmar factory will go on despite the current local political situation as the industrial estate where the factory is located is under the management of a Japanese company. Construction work is still on going on site and the new factory is target to be completed in 2022. This will further boost TGUAN's top and bottom line.
4. The company's continual effort to increase the gross profit margin. According to Mr. Alvin Ang, one of the company's KPI is to increase the gross profit margin to 18%. The Q1 gross profit margin is 15.81% (44,602 / 282,139 x 100%). A slight increase in gross profit margin will greatly increase the net profit.
5. RM 0.01 interim dividend announced, ex-date on 21-July-2021. No surprise here, same amount declared in Q1 2020.
Livechat with TGUAN:
Disclaimer: This is a personal opinion recorded for my personal record. Nothing on this Blog constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. The author shall not be held accountable for any investment decision made by the reader. Invest at your own risk.