KLSE Trackers: SLP Resources Berhad

General Review

The booming state of popularity in Plastic-Packaging-Industry & Paper-Packaging-Industry had triggered some question mark in most of the investor mind. Companies like SCGM, PPHB and BPPLAS is on an artificial bull steroid to be on the rise. On a promising economy outlook and sentiment, Packaging Industry will continue to gain momentum and shine, unveiling their true value. One of the lagging counter that caught my attention on a potential upside is SLP Resources Berhad.

Business Model

SLP Resources Berhad is a Malaysia Based investment holding company involved in manufacturing and sale of plastic packaging and plastic related products. The company commercialised over 1000 ranges of plastic packaging products internationally, including Japan, Norway, United Kingdom, Australia, Denmark, Germany, Thailand and Indonesia.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor.com)

-Taking year 2009 as the base year where company started to get back on track after the severe decline in revenue due to the low average selling price of products. SLP recorded a growth in revenue of 24% in 4 years (130 Million to 160 Million)

-SLP recorded a healthy Profit attributable to shareholder of 70% in 4 years (6.6 Million to 11.2 Million)

-Steady growth of Earning Per Share of 70% in 5 years (2.67 cents to 4.54 cents)

-Total Asset of RM117 Million, Total Liability of RM28 Million and Total Equity of RM89 Million (A low gearing company with D/E ratio of 0.3/0.7)

China which is well favoured for their competitive price sees to lose their competitive advantage on the high price of Polyethylene and rising production cost. With the price of plastic packaging almost on par with Malaysia, we will see most of Malaysian packaging company gaining market share worldwide. On the other hand, Japan, which is one of the Malaysian largest importer of plastic packaging product, seeks to pile up their stocks as the country prepares to increase the consumption tax from 5% to 8% which eventually boost Malaysia packaging industry earnings. SLP Managing Director Kelvin Khaw in his statement says that that SLP is confident to produce 32,000 tonnes of packaging material in 2014 compared to 28,000 tonnes in 2013 which will project the estimated figure of 184 Million in revenue and 12.7 Million in profit (if they able to maintain the profit margin of 6.9% as FY2013) translating into 5.1 cents Earning Per share in FY2014 (more than 10% growth)