Tekseng (7200), 0.845

Business engaged in the manufacture and trading of PVC related product and solar panel.

Key exporter beneficiary:

1. US demand rise for solar panels to last through at least 2017.
2. US anti-dumping duties on China and Taiwan producers provides a 20% pricing advantage. 
3. Cost effective after joint venture with Taiwan company will more production line.

2016 net earning to rise by over 5 fold from 2014's Rm7 million to Rm41million

1. Potential upside given october's annualized net profit reached RM50 million, above full year 2016 forecast.

2. New OEM contract with assured intermediate term profit to add Rm5 million to net profit.

3. Solar panel will boom early next year. The global market for solar panels is expected to soar to a record high in the first half of 2016 because of strong demand as well as favorable policies in the USA and China. IHS says that manufacturers will produce 16.82 gigawatts of solar panels in the first quarter next year followed by another 17.73 gigawatts in the second quarter. One gigawatt is nearly the equivalent energy produced by a large gas or nuclear plant.

Capital management

1. Dividend yield could reach 4.8% in 2016 based on min 30% payout ratio policy.

2. Solar panel manufacturing JV could enhance capital management.

Target price: short term TP Rm1.15; long term TP 1.30, implied 2016 Forecast EPS

Tecguan (7439) in a good profit trend

Market price: Rm1.54

NTA: Rm2.00

Gearing ratio ( Total asset/ total liabilities)=  1.93 times

Net cash per share: Rm0.71 ( cash rich and healthy financial status)

Teck guan perdana berhad, engaged in the manufacture and sales of cocoa products in Malaysia, product primarily include cocoa butter, cocoa powder. If also engaged in trade and export of plantation produce; finished wood products, trade cocoa bean.

Buying points:

•       80% sales mainly in foreign currency, cost of good sales 73% in MYR. ( without any risk for currency conversion risk and benefit from strengthen USD dollar)
•      Oil palm planted area are matured ( Average 13 years crop age, it’s a best harvest age).
•        Rm2.00 NTA compare market price now Rm1.54 market price. ( undervalue)
•        Healthy balance sheet with healthy cash flow.

Target price:

Based on PE ratio forecast next Q3 and Q4 net profit. If next two Q3 and Q4 net profit can maintain profit like Q1 and Q2 2015  average 2.5 million to 3 million, company forecast PE will be PE ratio around 6 times ( is very cheap damn cheap!)

TP1: Rm 2.00 (short term); long term TP: RM2.30