TGuan- another good quarter!

Results Update

For QE30/9/2013, TGuan's net profit increased by 108% q-o-q or 86% y-o-y to RM11.1 million while turnover increased by 5% q-o-q or 21% y-o-y to RM188 million. The increase in revenue was mainly due to "the higher average prices of raw materials which translated to higher selling prices compared to the corresponding period in 2012". The increase in profit before tax was mainly due to "higher contribution from stretch films, industrial bags, compounding and other smaller divisions due to better selling prices. There is also a significant gains on foreign exchange as the USD appreciated markedly against the RM in the current quarter compared to the preceding quarter".


Table: TGuan's last 8 quarterly results


Chart 1: TGuan's last 34 quarterly results

Valuation

TGuan (closed at RM1.66 today) is now trading at a PE of 5.8 times (based on last 4 quarters' EPS of 28.8 sen). At this PE, TGuan is deemed fairly attractive.

Technical Outlook

TGuan is in a steady uptrend  since the beginning of 2009. That uptrend accelerated noticeably in October 2011 and in May this year, the share price suddenly spiked up. Since then, the share price has slid back in a medium-term downtrend (or a flag formation). Over the past few weeks, the share has been attempting to break above the downtrend line (or the upside of that flag formation) with resistance at RM1.65. A breakout of this level could send the stock into another rally- akin to the May rally.


Chart 2: TGuan's daily chart as at Nov 26, 2013 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, TGuan could be a good stock for a medium & long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, TGuan.