I finally pulled the trigger after TGUAN released its 4th Quarterly Report recently. After seeing its share price peak at RM3.XX in November 2020, TGUAN has been on a serious downtrend and had retreat to low RM2.XX level. The share price dropped further even after a pretty ok QR released on 25-Feb-2021.
“Thong Guan Industries Bhd is a Malaysia based investment holding company. Along with its subsidiaries, the firm is engaged in trading of plastic packaging products. It operates in two segments including Plastic products and Food, beverages and other consumable products. The company generates the majority of the revenue from the plastic products segment which comprises of stretch films, garbage bags, industrial bags and PVC (Polyvinyl chloride) food wrap.” *taken from i3investor*
I’ve been holding TGUAN since 2013, yes since the very beginning of my investment journey. I remembered I picked TGUAN from the newspaper, due to its low PE and relatively ok DY. Yes, it’s just that simple, and I bought 20 lots @ RM 1.65 on 13-Jun-2013. Based on the current price plus all the dividends, bonus issue, the proceeds I got from the sale of the TGUAN-LA and free TGUAN-WA, my current return at today's price of RM 1.95 is approx. 203% over 8 years, average around 25% per year. Not bad lah!
Over the course of 8 years (FY2013-2020) the company has grown its revenue from RM 720.3mil to RM 960.6mil (33.36%) and net profit from RM 28.1mil to RM 74.8mil (166.19%). The most important development is the increase in net profit margin from 3.9% to 7.8%, which is due to the development of high profit margin product – the premium stretch film and the newly commissioned courier bags. Of course, the low oil price (which means low raw material price) in FY2020 also contributed to their recent growth. Compared to the previous year (FY2019), TGUAN managed to record increased revenue and a rather stellar 21.04% increase in net profit, even though they lost some production time during the Movement Control Order 1.0 due to COVID-19 pandemic. It’s fair to say if it’s not because of the pandemic, TGUAN would have achieve RM 1.0bil revenue, as highlighted by its Executive Director Mr. Ang See Ming during an online session with CGS-CIMB few months back. (link here: https://www.youtube.com/watch?v=oNqNurTMdvc&t=37s) .
Cash position improved to RM 293mil compared to last year’s RM 228mil (+28.5%), and +13.6% compared to the previous Q (RM258mil). Total debt increased slightly which is not a big concern as TGUAN has been a net cash company as far as I can remember. Current cash pile translates to approx. RM 0.387 net cash per share. Recorded a positive cash flow on RM 64mil in the FY2020.
The followings are the reason why I decided to further invest in TGUAN:
1. Continuous growth in revenue, net profit and profit margin from 2018-2020.
2. Massive expansion plan in placed as shown in the Youtube video above.
3. Solid company that has never recorded any losses in the past 20 years.
4. Share price has dropped from the high at RM 3.35 to RM 2.10 (-37.31%) even though it recorded +36.12% and +21.04% growth in net profit in the last 2 years. I see this as a very good opportunity to accumulate TGUAN’s share at the current PE at 10-ish level.
5. Consistent dividend pay-out. Current DPS at 4.5 cent, DY at 2.15%
6. Solid balance sheet with net cash position.
The following concerns I had with TGUAN:
1. Expansion plan in Myanmar might be forced to call-off due to the current political crisis in Myanmar which cost potential financial loss to TGUAN. Currently no updates from TGUAN’s management on this issue.
2. Rising oil price which means higher raw material cost, and depreciating of USD against MYR.
3. Prolonged travel restriction due to COVID-19 which may further hindered TGUAN’s expansion plan due to machineries cannot be commissioned by engineers from oversea.
Conclusion: I think the positives are more than negatives and most of the negatives are just temporary, except for the Myanmar issue, which will be really a big hit to TGUAN’s future prospect if it's not resolved. Nevertheless, the new 16-acre plant which is projected to contribute RM 1.0bil revenue seems very attractive already. Furthermore, due to the recent sell down, I believe the entry at RM 2.09, PE10.65 seems to be pretty safe to me, because I think TGUAN deserves PE13 at least. I will further monitor the share price and accumulate more should the share price slump further. *At the time of writing, TGUAN closed at RM 1.95 on 9-Mar-2021, -6.7% from my purchased price.
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.
在TGUAN最近发布了其第四季度报告后，我终于作出了买卖决定。在2020年11月股价达到3.XX令吉的高位之后，TGUAN一直处于严重的下跌趋势中，并回落至低2.XX令吉的水平。即使在2021年2月25日发布了相当不错的QR，股价仍进一步下跌。
“ Thong Guan Industries Bhd是一家马来西亚投资控股公司。该公司与其子公司一起从事塑料包装产品的贸易。它分为两个部分，包括塑料产品以及食品，饮料和其他消费品。该公司的大部分收入来自塑料制品领域，其中包括拉伸膜，垃圾袋，工业用袋和PVC（聚氯乙烯）食品包装材料。” *摘自i3investor *
自2013年以来我都一直持有着TGUAN，对就是从我的投资旅程开始以来就一直持有。我记得我是从报章上选中了TGUAN，因为它的PE低且DY还好。是的，就这么简单，然后我在2013年6月13日以RM 1.65买了2000股。根据目前的价格加上所有的股息，红股，我从TGUAN-LA和免费TGUAN-WA的出售中获得的收益，以今天的1.95令吉价格计算，我当前的盈利率大约为203％，平均每年约25％。还算不错啦！
在过去的8年中（FY2013-2020），公司的收入从RM 730.2M增长至RM 960.6M（33.36％），净利润从RM 2,810万增长至RM 7,480万（166.19％）。最重要的是净利润率从3.9％增至7.8％，这是由于公司开发了高利润率产品 - 优质拉伸膜和新投产的快递袋。当然，2020财年的低油价（这意味着较低的原材料价格）也为其近期的增长做出了贡献。与上一年（FY2019）相比，TGUAN的收入增长，净利润增长了相当不错的21.04％，尽管在行管令1.0中损失了一些生产时间。可以说，如果不是因为COVID-19，TGUAN将会实现10亿令吉的营业额，正如其执行董事Ang See Ming在几个月前与CGS-CIMB举行的在线会议上所提到的那样。 （此处链接：https://www.youtube.com/watch?v=oNqNurTMdvc&t=37s）
现金状况从去年的RM 228M（+ 28.5％）改善至RM 293M，和上一季度（RM 258M）相比增加了13.6％。总债务略有增加，这并不是大问题，因为TGUAN一直是一家净现金公司。当前的现金储备约等于每股净现金RM 0.387。在2020财年录得正现金流RM 6,400万。
以下是我决定进一步投资TGUAN的原因：
2018-2020年收入，净利润和利润率持续增长。
如上面的YouTube视频所示，公司已经有了大规模的扩展计划。
在过去的20年中从未有亏损的可靠公司。
尽管过去两年的净利分别增长了36.12％和21.04％，但股价却从最高的RM 3.35跌至RM 2.10（-37.31％）。我认为这是一个很好的入场机会，可以在大约PE10的水平累积TGUAN的股票。
稳定股息派发。当前每股派息为4.5c，股息率为2.15％
稳健的资产负债表， 拥有净现金。
我对TGUAN的担忧有以下几点：
由于目前的缅甸政治危机，缅甸的扩张计划可能被迫取消，这将会给TGUAN带来了潜在的财务损失。 TGUAN的管理层目前仍没有就此问题的发布任何消息。
油价上涨，意味着更高的原材料成本，以及美元兑马币的贬值。
由于COVID-19造成的长期旅行限制，这可能会进一步阻碍TGUAN的扩展计划，因为机械设备无法进行调试。
总结：我认为有利因素大于不利因素，而且大多数不利因素只是暂时性的，除了缅甸的问题。如果缅甸问题解决不了，那将对TGUAN的未来前景产生重大影响。尽管如此，新的16英亩工厂预计将贡献10亿令吉的收入，似乎已经非常具有吸引力。此外，由于最近的抛售，我认为以2.09令吉，PE10.65买入对我来说已经是相当安全的，因为我认为TGUAN至少有PE13。我将进一步观察股价，并在股价进一步下跌时积累更多。 *在撰写本文时，TGUAN于2021年3月9日收于1.95令吉，较我的购买价跌了6.7％。
免责声明：这只是个人意见，记录下来供我个人使用。此博客上的任何内容均不构成投资建议，绩效数据或任何建议，任何证券，证券组合，投资产品，交易或投资策略均适合任何特定人士的建议。作者对读者做出的任何投资决定概不负责。投资风险自负。