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TECGUAN (7439) - Why Tecguan (RM1.87)? Significant improvement in profit after tax and revenue (palm oil company)


TECGUAN (7439) - Why Tecguan (RM1.87)? Significant improvement in profit after tax and revenue (palm oil company)

Latest quarter result:
 
31/7/2016 - 15.79sen
30/4/2016 - 3.32sen
31/1/2015 - 0.04sen
31/10/2015 - 5.59sen
Total - 24.74sen
 
Current PE ratio : 7.56 (RM1.87)
Net assets: RM2.4590
 

 
Company background
 
Tech Guan is a Malaysia-based diversified multinational founded by the late Datuk Seri Panglima Hong Teck Guan in 1935. The company is principally an investment holding company with its subsidiary companies involved in the integrated and synergistic cocoa operations beside oil palm cultivation.
 
The company's business involved
1) Oil palm products (98% of total revenue)

2) Cocoa products (2% of total revenue)
 

 
According to annual report 2016, all planted areas under palm oil segment of the Group have attained maturity, with average crop age of 14 years.
 
The company have more than 2,000 arces of palm oil and cocoa estate plantation in Tawau, Sabah.

 
 
 
I am here to ANSWER a simple question.
Why TECGUAN?
 
1) Significant improvement in revenue and
profit after taxation for the quarter ended
31 Jul 2016
 
2) Improvement in balance sheet 
 
3) Crude palm oil's price increase compare
to prior year
 
4) Others
 
 
 
1) Significant improvement in revenue and 
profit after taxation for the quarter ended 
31 Jul 2016
 
As per quarter report released on 23 Jun 2016, the company's revenue have significantly improved from 66mil to 96mil (45% increased from last year) and profit also jumped by 245%
 
 
 
 
 
 
As per explanation, the increased was due to increase in selling price, sales volume and favourable exchange rate.
 
 
 
 
2) Improvement in balance sheet
 
 
From the balance sheet as per 31 July 2016, we have noticed that the net debt position have been improved from RM26,905mil to RM20,648.
Net assets position improved from RM2.2679 per share to RM2.4590 per share.
Also, for the first time in many years, the company's finally having retained earnings.
As the company have no declared any dividend since 2007, maybe it is time for them to start rewarding their shareholder again?
 
 
3) Crude palm oil's price increase compare 
to prior year
 
Information extracted from: http://www.mpoc.org.my/dailypalmoilprices.aspx?catID=b4ad7d4e-d7d0-410b-be86-9a80af0f4693&print=&ddlID=28abbe06-f695-4fd0-8bde-85d8a2ee9ccd
 
Date CPO price (RM) Date CPO price (RM)
1/8/2015 - 1/8/2016 2,327
2/8/2015 - 2/8/2016 2,338
3/8/2015 2,054 3/8/2016 2,415
4/8/2015 2,062 4/8/2016 2,444
5/8/2015 2,037 5/8/2016 2,407
6/8/2015 2,045 6/8/2016 -
7/8/2015 2,042 7/8/2016 -
8/8/2015 - 8/8/2016 2,439
9/8/2015 - 9/8/2016 2,466
10/8/2015 2,029 10/8/2016 2,500
11/8/2015 2,040 11/8/2016 2,484
12/8/2015 1,995 12/8/2016 2,525
13/8/2015 2,014 13/8/2016 -
14/8/2015 2,027 14/8/2016 -
15/8/2015 - 15/8/2016 2,622
16/8/2015 - 16/8/2016 2,539
17/8/2015 2,044 17/8/2016 2,643
18/8/2015 2,060 18/8/2016 2,576
19/8/2015 2,035 19/8/2016 2,578
20/8/2015 1,997 20/8/2016 -
21/8/2015 1,986 21/8/2016 -
22/8/2015 - 22/8/2016 2,543
23/8/2015 - 23/8/2016 2,578
24/8/2015 1,916 24/8/2016 2,600
25/8/2015 1,906 25/8/2016 2,561
26/8/2015 1,867 26/8/2016 2,552
27/8/2015 1,925 27/8/2016 -
28/8/2015 1,991 28/8/2016 -
29/8/2015 - 29/8/2016 2,517
30/8/2015 - 30/8/2016 2,526
1//9/2015 2,013 1/9/2016 2,520
2/9/2015 1,989 2/9/2016 2,595
3/9/2015 2,032 3/9/2016 -
4/9/2015 2,031 4/9/2016 -
5/9/2015 - 5/9/2016 2,644
6/9/2015 - 6/9/2016 2,629
7/9/2015 2,048 7/9/2016 2,598
8/9/2015 2,092 8/9/2016 2,609
9/9/2015 2,113 9/9/2016 2,640
10/9/2015 2,157 10/9/2016 -
11/9/2015 2,134 11/9/2016 -
12/9/2015 - 12/9/2016 -
13/9/2015 - 13/9/2016 2,592
14/9/2015 2,192 14/9/2016 2,564
15/9/2015 2,148 15/9/2016 2,594
16/9/2015 - 16/9/2016 -
17/9/2015 2,128 17/9/2016 -
18/9/2015 2,103 18/9/2016 -
19/9/2015 - 19/9/2016 2,642
20/9/2015 - 20/9/2016 2,693
21/9/2015 2,151 21/9/2016 2,677
22/9/2015 2,183 22/9/2016 2,725
23/9/2015 - 23/9/2016 2,676
24/9/2015 - 24/9/2016 -
25/9/2015 2,342 25/9/2016 -
26/9/2015 - 26/9/2016 2,715
27/9/2015 - 27/9/2016 2,663
28/9/2015 2,394 28/9/2016 2,605
29/9/2015 2,451 29/9/2016 2,616
30/9/2015 2,375 30/9/2016 -
1/10/2015 2,414 1/10/2016 -
2/10/2015 2,387 2/10/2016 -
3/10/2015 - 3/10/2016 2,636
4/10/2015 - 4/10/2016 2,600
5/10/2015 2,415 5/10/2016 2,556
6/10/2015 2,372 6/10/2016 2,579
7/10/2015 2,319 7/10/2016 ?
8/10/2015 2,276 8/10/2016 ?
9/10/2015 2,217 9/10/2016 ?
10/10/2015 - 10/10/2016 ?
11/10/2015 - 11/10/2016 ?
12/10/2015 2,257 12/10/2016 ?
13/10/2015 2,320 13/10/2016 ?
14/10/2015 - 14/10/2016 ?
15/10/2015 2,287 15/10/2016 ?
16/10/2015 2,302 16/10/2016 ?
17/10/2015 - 17/10/2016 ?
18/10/2015 - 18/10/2016 ?
19/10/2015 2,274 19/10/2016 ?
20/10/2015 2,319 20/10/2016 ?
21/10/2015 2,367 21/10/2016 ?
22/10/2015 2,371 22/10/2016 ?
23/10/2015 2,328 23/10/2016 ?
24/10/2015 - 24/10/2016 ?
25/10/2015 - 25/10/2016 ?
26/10/2015 2,279 26/10/2016 ?
27/10/2015 2,322 27/10/2016 ?
28/10/2015 2,341 28/10/2016 ?
29/10/2015 2,370 29/10/2016 ?
30/10/2015 2,363 30/10/2016 ?
31/10/2015 - 31/10/2016 ?
Total (RM) RM130,048 Total (RM) RM115,548
Total days 60 days Total days 45 days
Average price (RM) RM2,167 Average price (RM) RM2,568
 
 
Total increase in average price = RM401
Percentage increase in average price = 18.50%
As per calculation above, the average CPO (crude palm oil) price have been increased by 18.5% (updated until 6 October 2016). With a higher average CPO price, I foresee that the revenue and profit will increased on the next quarter as the total increased in average price will be fully recorded as profit if the cost of sales remain the same.
 

4) Others
 
http://www.thestar.com.my/business/business-news/2016/08/18/palm-oil-enters-bull-market-as-demand-rises/



http://www.bloomberg.com/news/articles/2016-10-06/indonesian-palm-reserves-drop-as-exports-jump-most-in-22-months
 
 



 

 
Thank you for your time. Trade at your own risk!!! Do research before any investment decision!! Happy trading :-)

TECGUAN (7439) - Why Tecguan (RM1.87)? Significant improvement in profit after tax and revenue (palm oil company)
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