Thursday, 6 April 2017

This packaging company is valued below USD 10 million for now, but it is going up soon.

As we talk about investing in Malaysia, one of the coming up segment in the Malaysian equity market could be looming at the packaging and warehousing segment. I will continue to put my bullish view on this segment due to the attractiveness of the future potential that Alibaba can bring to Malaysia by putting Malaysia as the main regional distribution hub.

As you would know, the move of Alibaba will definitely invite a lot of MNC over in setting up manufacturing arm and factory here in order to have a better proximity. This will also invite transfer of technology, and will be a big boost for the Malaysian economy. When all this happen, I could not deny that packaging company will going to be golden gooses that will pay fat dividend in the future.

Of course, I had recommended a few packaging company earlier that are doing well, but sadly it was rammed up unethically by some people which I do not have any idea who they are as well.

So I am going to introduce to you again another potential company again, and I hope you guys will queue up properly to invest. Remember, I am asking you to invest. Invest in the future potential, not asking you to make a killing intraday trading, agree ?

I am going to be very straight forward with you on this company called Master-Pack Group Berhad (Master - 7029).

This small little Penang based packaging company had been laying almost unseen by many investor. However, I had to agree that as of lately, there had been some buying up volume that cause the company to go up. Yes, I agree that the share price had went up, but I will also state some of my reason to see this company going further.

If you refer back to some of the corporate exercise that had went through during the 2015 tenure, there is a a private placement amounting to a maximum of 5 million shares being placed out at the price of RM 1.00, which is the Par Value price of the share.

So, this investor Mr Ch'ng had invested RM 4 million to acquire 4 million stock in Master. And subsequent to that, now he had a total of 5.2 million shares, which is almost 10% of the total share issued in Master (Master total share issued is 54.62 million). The other larger shareholder will be Yayasan Bumiputera Pulau Pinang Berhad, holding 29% of shares.

For a fundamentally sound company like Master, and being the cheapest in the whole packaging industry (currently only RM 38 million in market capitalization), it is viewed that Master had a high chance being taken over now as foreign fund are targeting to take control of the company by acquiring substantial stake in the company shares.

To support my claim on Master being a highly valuable target, I would like to point towards the case of Iretex Corporation Berhad (Iretex - 7183) that had saw new shareholder from Singapore emerging as controlling shareholder. The entrance of Elite Cosmo Group Limited into Iretex albeit the company lacking on fundamental and displaying poor financial performance had raise eye brown on what is brewing in the packaging industry in Penang.

If I am to compare Master and Iretex, you can see that Master is a profitable company, and also commending a much higher NTA of RM 1.32 compared to Iretex NTA of just RM 0.36. However, both of the company are standing at a market capitalization of just RM 38 million as of now. But, we have to take note that Iretex also have Iretex-LA and Iretex-WA, which makes Iretex commanding a higher market capitalization indirectly.

Based on this, Master is definitely undervalue, and very prone to foreign fund that are eying on this industry.

It had also came to my knowledge that Master had also recently secure more packaging contracts. According to some industry sources that are familiar with it, it is being said that Master could had possibly secure a new packaging contract with a local solar manufacturer. While I cannot really verify this piece of news, if you are serious about it, probably you might want to take a drive to the factory of Masterpack and see if there are any solar panel laying around. Haha. If you really did saw, then you better know what to do next.

As I had said earlier, I recognized that Master already went up. But due to it's forward looking prospect, and chance of being taken over at a higher price, I would still think that Master is a very attractive company. After all, comparing Master and Iretex, Master is way better than Iretex fundamentally. But since a Singaporean company can see the beauty of Iretex, what about Masterpack which is sitting at just a market cap of RM 38 million and NTA of RM 1.32 ?

You do the maths, and decide the rest. Who knows take over RM 1.00 can be offered ??

No comments:

Post a Comment