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