Review Of Tomypak

Dedicated to tklaw.

1. The track record.

Here's my interpretation... :D

1. 2006 to 2008. The company simply wasn't exciting. It wasn't going anywhere and Tomypak did not have a balance sheet to bring home to show.

Of course, I could 'cheat' and suggest that perhaps 2008 was the turnaround year but I do believe it's meaningless because Tomypak's earnings really tumbled for its 2007.

2. If you look at fy 2009, Tomypak made 20.024 million. Yes that was it. That's the ticket. That's the change in fortune one was looking for in a company.

Yes, I am sure many believes what the Auntie says about the Wind Of Fortune and from an investing perspective, apparently the Auntie would suggest that is rather profitable when one invests in a company when the Wind of Fortune is starting to change.

But of course, at this moment of time, given what has happened (for Tomypak and Daibochi), it's probably me letting go big gas because what I write would appear to be based on hindsight.

Of course, I do not deny that such accusation, because it does indeed have some truth in it, since one is asking me now and not end 2009. ( No joke! :D )

3. Anyway, if you look at the table above, when exactly did the earnings turned? 09 Q1 and 09 Q2 does showed that perhaps the Wind of Fortune had blown Tomypak's way. The earnings jumped to 3.7 million and 4.525 million. Margins improved. It was clear, no?

And guess what?

Hmmm.... mmmmm..... yes, I have to give credit to my dearest OSK.

LOL!

Nah.. I am not going to be a jerk and pretend that I was not aware when I was more than aware on what was happening back last year. :D

Yes... SPOT ON for OSK. :D

:P


And the above section of the report is very exciting. Note the 'small' chart littered with arrows.

That showed how Tomypak the stock was absolutely flying but yet, at the multi-year high of 1.42, many were sceptical because here came OSK with its gun blazing and gave Tomypak a TP of 2.50!!!

It's understandable because the fear is there. Buy high and sell much higher requires a much higher hand! The below chart says it all then. The line showed when OSK released that report on 14 Aug 2010.

Sep 2009, on Star Business: Plastic product makers poised for better year

• ...Other companies in the industry that seem to flourish in these tough economic times are the plastic film makers that supply flexible packaging products mainly to large MNCs in the food and beverage sector.
  
  Tomypak Holdings Bhd netted RM8.3mil in the six months ended June 30, which exceeded its full-year net profit of RM7.6mil in FY08.
  
  The company attributed the strong results to “improved overseas market, higher sales of better quality products and lowest cost of goods manufactured over the past six months.’’
  
  Bigger rival Daibochi Plastics and Packaging Industry Bhd made a net profit of RM10.8mil in the first six months on sales of RM113mil.
  
  At the end of last year, Daibochi introduced a new sealing layer for its food and beverage customers that was cheaper to produce and speeded up packaging process.
  
  “The management is confident that its current earnings trend is sustainable at least until FY10.
  
  “This is given that orders are generally based on two-year contract terms and cost savings or increases are passed through directly on quarterly basis,’’ a local bank-backed brokerage said yesterday.
  
  Annualising Daibochi’s half-year income would lift its full-year net profit to RM21mil. The group’s best year to-date was in 2003, when it made a net profit just shy of RM10mil.
  
  Daibochi is the market leader in flexible packaging in the country, with an estimated market share of 30% to 35% based on revenue.
  
  The company has a market value of RM108mil while Tomypak is worth RM56mil.

The plastic industry was already taking about the changes in the fundamentals of its business economics. The good times were here!

And OSK was spot ON! ( See I do give credit. :P)

Come Nov 2009: Quarterly rpt on consolidated results for the financial period ended 30/9/2009
Tomypak's numbers was simply a blowout! It was SUPERB! (Strange but if I was not mistaken, OSK did not do a follow up article on Tomypak's earnings since Aug 2009!!!)

Then came 26th Jan 2010.

:D

CIMB came out with a 37 page report on the plastic packaging sector!

Yes! 37 pages!

Now I am not saying the upgrades are not justifiable but the size of the report, seriously signalled the intent! That's my interpretation! It was a massive write-up!

And the very morning, the report was out, the Edge Financial Daily highlighted it.

CIMB Research has Outperform on Daibochi, Tomypak

• For Tomypack, its target price is RM4.55, based on 8.4 times CY11 P/E, a 30% discount to our 12 times target P/E for Daibochi given its smaller market cap, poorer liquidity and less exposure to the non-F&B sector.

And needless to say the stocks moved and the fire was fan big time by the Edge Financial Daily for it gave it a follow thru article. Plastic makers surge on CIMB Research upgrade LOL!

Some was amused then. Very amused!

1st Feb 2010: Plastic packaging stocks akin to glove makers

That Tomypak did NOT disappoint was very important!

25 Feb 2010: Quarterly rpt on consolidated results for the financial period ended 31/12/2009

It was incredible!

ps: The were 'signs' that gave suggestion that the sector was worth a buy, yes? Seriously, if one was 'aware' of what was happening, one could have made some buck or two, yes?

ps/ps: The explosive growth was rather crucial yes?

ps/ps/ps: And Tomypak's share base is extremely SMALL, yes?

But then May came.

10 Q1 earnings did disappoint. Earnings came in at 5.151 million. Compared to the previous quarter, the decline was drastic and the explosive growth 'appears' to have ended. However some do not like the q-q comparison and they argued that if compared on a y-y basis, the growth is still impressive!

Yes, it's bread or steak time now! LOL!

Is this the start of the end or is this just a blip?

Tomypak's reporting its earnings this month and in terms of the stock, the stock is giving the investing public some seduction with the company announcing the following: TOMYPAK HOLDINGS BERHAD (“TOMYPAK” OR “COMPANY”) PROPOSED SHARE SPLIT; PROPOSED BONUS ISSUE; PROPOSED AMENDMENT TO THE MEMORANDUM OF ASSOCIATION; AND PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL. (COLLECTIVELY REFERRED TO AS THE “PROPOSALS”)

ps: I would also note the constant exercising of ESOS. The following table from the above announcement would be really useful.

How?

Can ah?