Superlon - The Insulation Company

 

Company : Superlon Holding Berhad

Business : Manufacture and sales of insulation tubes, nitrile butadiene rubber for HVAC&R industry. Company also doing trading HVAC&R parts (copper pipes). Products are mainly for export market with factory in Malaysia and Vietnam. See note below. It is a Taiwanese managed company.

 

 

Manufacturing locations

 

Company is in net cash position. However, no growth in CAGR on profit after tax. Small cap company with maximum revenue of RM100 million.

 

10 years revenue

Revenue stagnant at RM100 million and profit margin is declining after FY 2017. It seems that cost is rising up and eroding their margins.

 

Geographical breakdown of revenue as follow:

 

Breakdown of Malaysia revenue.

 

Lates Q1 result:

Q1 result dropped when compared YoY and QoQ. The worst is not over yet as Q2 is from August to October where Vietnam plant has shutdown.

 

 

Prospect:

• Market penetration to Oceania and Africa but not sure the contribution.

 

Risk:

• Vietnam plant shutdown
• Soft global demand
• Raw material butadiene cost – synthetic rubber rising?

 

Dividen:

Dividen is stable as company still have RM20 million cash but will drop. Pay-out ratio is 30%. See dividen chart below.

 

 

 Technical Analysis on Chart

Forming triangle but will take long time before breakout.

 

At time of writing, I don’t have Superlon share. However, it is interesting to know that Cold-Eye is major shareholder of this company.

 

Technical Analysis - Parabolic Curves

 Parabolic Curves

Accumulate (buy) at the bottom of the curve.  Usually 3 steps moving up.

Parabolic Curve - Symmetric

Example : INNOPRISE

Parabolic Curve - Skewed Right

Example: PESTECH

Parabolic Curve - Skewed Right

Example: SCOMNET

Parabolic Curve - ??

Example : LIIHEN

Parabolic Curve - ??

Example : POHUAT

Scientex Berhad - Big Bro in Flexible Packaging

 

Company : Scientex Berhad   

Business:

Manufacture and sales of stretch film and flexible packaging as well as building affordable houses in Malaysia. The company has vision to double the revenue in every five years. So far they doing well to achieve the mission.

Company is in the list of Asia’s 200 best company under a billion by Forbes.

 

 

 

Clear strategy to grow the company and revenue is rising every year.

 

Packaging Division:

Year 2020 has produced 295,000 metric tonnes with 18 new extrusion machines. The nearest peer is Thong Guan who capacity of 150,000 metric tonnes.

 

Factory and sales office location. Products are mainly for export market.

 

 

Property Division:

 

Below is the housing project locations. Quite a few located in Johor. Overall, affordable houses (landed property) enjoy very good take up rate.

 

Latest result:

Q4 seems picking up but Q1 2022 will be affected by FMCO. Property division is doing well despite challenging environment due to various MCO imposed. However, the packaging division revenue is lower which is a surprise as other packaging companies like BPPLAS and Thong Guan are doing well. The main cause is the consumer-based packaging is affected (such as retail). It seems that Stretch Film is performing very well across the whole packaging industry.

 

Cash flow

Cash flow from operation is very strong and bulk of the money is used to purchase lands for future development.

 

Prospect:

• Acquired Daibochi Berhad which has present in Myanmar (Export from Myanmar to EU has lower import duty).
• Open up retail sector that will spur their consumer packaging sales.
• Continuation of land acquisitions in various states such as Johor, Penang and Selangor.
• Very strong take-up rate of affordable houses in Penang, Melaka and Selangor.

 

 

Dividen is stable but not very attractive (lower than bank FD ! ). Company needs money for expansion (buying land and acquire companies).

 

Technical Analysis on Chart:

 

Since bonus issue in Dec 2020, the price has been sleeping. Don’t see any speculation on this counter. Big company is very difficult to move. Hence it is a long long term investment. At time of writing, I don’t have Scientex share yet.

FoundPac Group - Making Precision Engineering Parts

 

Company : FoundPac Group  

Business :

Design and manufacture of precision engineering parts and stencil for semiconductor industry. See below note. Factory located in Penang. More than 75% of their products are for export market.

 

 Company has been selected as Asian’s 200 best under a billion compay. Well done!

Financial information:

Net cash position of RM50 million with no bank borrowing.

 

5 years revenue

 

There is growth of revenue but droped slightly in FY 2021. Overall CAGR Revenue and PAT are growing.

 

Directors’ shareholding

 

Geographical revenue breakdown

 

Precision engineering parts are still the major contributor of 73.5% follow by laser stencil 20% and industrial equipment/machinery at 6%. The georaphical spread of revenue is pretty balance between Asia and North America and Europe. Gross profit margin is pretty good at >50%.

 

Major customers are as follow but no idea who are they.

 

Peer comparison

Latest quarter result

Revenue pretty much the same for Q4 and profit remain the same as Q3.

Prospect:

• Acquiring few companies to expand their business. See note below:
• Supplying parts to auto-assemblers (steering & gear systems)

 

Dividen:

Dividen is low and same as other semi-conductor companies.

Quick look at the Chart

Lots of speculation on this company. Price can shoot up 100% then dive 100% and up 100% again.

Tech stocks are high PE, low dividen and extremely volatile (driven by retail investors?). At time of writing, I don’t have any Foudpac shares.