Hot Stock Tomypak jumps 10.6% on undervaluation

by **Cals** Mon 05 Oct 2015, 01:28

Hot Stock

[size=28]Tomypak jumps 10.6% on undervaluation

By Meena Lakshana / theedgemarkets.com | October 2, 2015 : 12:17 PM MYT

KUALA LUMPUR (Oct 2): Tomypak Holdings Bhd ([You must be registered and logged in to see this image.] Valuation: 1.70, Fundamental: 2.10) shares rose as high as 10.6% as interest gains in the stock due to its undervaluation.

At 11.26am, the stock rose as high as RM2.40, before paring gains. It slipped to RM2.28, with a total of 423,100 shares done.

The stock has been on a steady increase since July this year. Year-to-date, the stock has climbed 78.13%, outperforming the FBM KLCI which has declined 6.78%.

When contacted, a remisier told theedgemarkets that interest in Tomypak has been gaining as the stock is seen as undervalued.

"Most of the buyers are Johor and Singapore counters," he said.

"It looks like the majority shareholders are coming up to buy the shares, indicating that the value (of the stock) should not be so low," he added.

Tomypak was picked as Insider Asia's Stock With Momentum on Sept 22.

The research firm said that the company has declared dividends twice for 2015, totalling 4 sen and yielding investors 2.1%.

As at end-June, the company's gearing stood at a low of 3.3%. Tomypak is trading at 1.7 times book and a trailing 12-month price to earnings ratio (PER) of 11.9 times.

"By comparison, peer Daibochi (Plastic and Packaging Industry Bhd ([You must be registered and logged in to see this image.] Valuation: 0.90, Fundamental: 0.35)) trades at 2.7 times book with a trailing 12-month PER of 19.6 times," it added.

The research firm also noted that for the first half of financial year 2015 (1HFY15), revenue declined 5.1% year-on-year (y-o-y) to RM101.9 million but net profit rose 4.8 times to RM11.1 million, boosted by better sales mix and improved production efficiency.

Net margin for 1HFY15 jumped 8.7 percentage points to 10.9% from 2.2% in 1HFY14.

Tomypak also plans to double its current annual production capacity to 35,000 tonnes by building a new factory in Senai, Johor, and is slated for completion by end-2016, the research firm said.

The Johor-based company manufactures flexible food packaging materials for powdered beverages, seasoning, sauces, snacks, instant noodles and pet food.

Its main clients include Nestle, Maggi, Kraft Foods and Apollo Food Industries.

In 2014, it derived 57% of its revenue from export markets with the rest from the domestic market, said Insider Asia.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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