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Sector                     : Industries Products and Services

Sub Sector     : Packaging Material

Focus : Packaging


Industry Review


With the Covid 19 pandemic around the world, more and more people would buy their item online. The increasing demand of transportation of goods has also increased the demand of packaging. In Malaysia packaging manufacturing is considered an essential business and allowed to operate with a strict standard of procedure during the movement control order (MCO) announced by the Government of Malaysia from 18 of March 2020. For the year 2020 the packaging exposure business had been affected by the lockdown around the World and compensated by the increasing packaging demand locally in Malaysia.


This article would compare three packaging companies listed in Bursa Malaysia.

  1. BP PLASTICS HOLDING BHD (BPPLAS)

  2. SLP RESOURCES BHD (SLP)

  3. THONG GUAN INDUSTRIES BERHAD (TGUAN)


Location


BPPLAS and SLP only had operations in Malaysia. Where BPPLAS operated in Johor and SLP operated in Kedah. Whereas TGUAN had operations in multiple states in Malaysia and even overseas. TGUAN had operation in Kedah, Perak, Johor, Sabah, China, Vietnam and Myamar.


TGUAN had an operational advantage in the East Malaysia because it had an operation plant in Sabah. Asides that TGUAN had operation plant in other country which enable them to had operation advantage as 41 % of the 2020 TGUAN revenue are from the Asia Country.


Revenue


Company

Revenue 2019

Revenue 2020

BPPLAS

Malaysia

Asia Countries

Others

Total


RM 90,095,106

RM 206,109,601

RM 39,987,151

RM 313,191,858


RM 91,383,589

RM 187,262,030

RM 37,951,878

RM 316,597,497

SLP

Malaysia

Asia Countries

Others

Total


RM 67,059,484

RM 69,425,191

RM 30,364,237

RM 166,848,912  


RM 78,312,704

RM 54,663,847

RM 14,016,223

RM 146,992,774

TGUAN

Malaysia

Asia Countries

Others

Total


RM 185,218,000

RM 423,246,000

RM 330,739,000

RM 939,204,000


RM 238,543,000

RM 385,618,000

RM 336,420,000

RM 960,581,000


Base on 2020 revenue, TGUAN had the highest market share which is 66.18 % followed by BPPLAS which is 22.07 % and SLP 11.76 %. Compared to 2019 revenue, 2020 revenue had reduced except for BPPLAS which its revenue remained the same.mainly due to reduction of export to other countries. The reduction of export revenue had covered by the increase of revenue generated from Malaysia. TGUAN local revenue for 2020 had increase by 28.79 % followed by SLP 16.78 % and lastly BPPLAS 1.43 %.


Both TGUAN and BPPLAS had 70 % of their 2020 revenue from oversea market which were affected due to the World lock down. While SLP only had 46.72 % of their 2020 revenue from oversea markets.


Sustainability


Besides TGUAN which had Debt to Equity ratio of 0.22 and interest coverage ratio of 38.28, BPPLAS and SLP does not have any debt.


Assets & Liabilities


5 years Compound Annual Growth Rate (CAGR) of assets and liabilities were calculated to make comparison.


Company

5 years CAGR of Assets

5 years CAGR of Liabilities

BPPLAS

3.56 %

1.56 %

SLP

6.96 %

8.17 %

TGUAN

10.22 %

13.52 %


TGUAN had the highest growth in asset amongst the three companies. Besides that TGUAN growth of company asset is supported by growth of company liabilities.


Company

Non Current Asset in Malaysia 2020

Percentage of Non Current Asset in Malaysia 2020

BPPLAS

RM 78,704,345

100 %

SLP

RM 75,408,057

100 %

TGUAN

RM 258,134,000

85.54 %


BPPLAS and SLP had almost the same non current asset in Malaysia while TGUAN is more than 3 times their size. Both BPPLAS and SLP had their non current asset in Malaysia only while 85.54 % of the TGUAN non current asset in Malaysia.


With the same non current asset in Malaysia between BPPLAS and SLP both companies shall have almost the same revenue however revenue for SLP in 2020 is RM 146,342,946 or 46.73 % lower than BPPLAS.


Price Analysis


Description

BPPLAS

SLP

TGUAN

Market Cap (27 July 2021)

RM 339,651,930.00

RM 301,111,999.05

RM 949,504,486.40

P/E

11.42

18.28

11.83

Dividend Yield

4.42 %

5.79 %

1.20 %

Dividend Payout Ratio

50.70 %

105.85 %

14.14 %


From the price analysis BPPLAS had lower P/E compared to SLP which had almost the same market cap and lower P/E compared TGUAN which had three times higher market cap than BPPLAS.


BPPLAS had a high dividend yield of 4.42 % with 50.70 % dividend payout ratio, there is extra cash retained for future extension unlike SLP which dividend pay out is more than the earning for year 2020.


Du Point Analysis


Description

BPPLAS

SLP

TGUAN

Nett Profit Margin

9.35 %

11.20 %

8.36 %

Asset Turnover

1.10

0.68

0.95

Equity Multiplier

1.40

1.19

1.51

ROE

14.39 %

9.06 %

12.01 %


SLP had the highest net profit margin, however it had low asset turnover of 0.68 which had reduced the return of equity, ROE of SLP to the lowest amongst the three.


BPPLAS had the highest ROE of 14.39 % and asset turnover more than 1.


Summary


From the above comparison BPPLAS is worth for further analysis.




http://ivkls.blogspot.com/2021/07/industry-comparison-packaging.html

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