Tough times are good times, provided you know how to capitalize that
moment correctly. Many a time, we could be telling ourselves to buy when
the market had dipped. But when the actual event happen, 80% of us fail
to execute and rather go with emotions. That is the difference of
planning, and really executing something. Comparing between an execution
that is done based on planning and an execution done based on emotions
and impulsive decision - It is a fact that the later factor (emotions)
is far more influential.
At a tough times like this, if you can be given a chance to spot a good company with profit and dividend record at a reasonable price - Would you invest now ?
That right - I found out that BP Plastics Holdings Berhad (Bpplas) might be the company suitable for this category.
Basically, Bpplas is involved in industrial packaging and stretch film manufacturing. This segment had been touted as a high potential segment due to the growing packaging demand in the Asia region. If you would want to have a in depth information on the products and offering of Bpplas, then it will be good for you to visit their website directly for more information.
As for me, I am going to share with you my analysis - Why I think Bpplas 2Q 2017 performance will be better than the 1Q performance.
One of the core reason for the drop of net profit reported for the performance on 1Q 2017 is due to higher resin price, with resulted to higher raw material input, hence reducing the gross profit margin. Now that the price of resin is somehow positively correlated to the movement of crude price oil, a higher crude oil price will result in a higher resin price, while a lower crude oil price will see a lower resin price - theoretically speaking.
So if this chart which show a supposing lower average of crude price in 2Q compared to 1Q, it is valid to assume on a lower price of resin, and hence, a lower input cost for Bpplas as a whole. Of course, you have the rights to doubt me on my point of sharing. However, I had did a similar analysis earlier on the share of Guan Chong Berhad (GCB), depicting that the lower cocoa prices will boost the business margin moving forward. That was done when GCB is trading around the range of RM 1.05. And as a matter of fact, GCB latest result display a higher net profit albeit seeing a drop in revenue. But that is not the important thing, because the important thing is that GCB went on trading at a high of RM 1.65, and that I am talking about almost 60% capital gain in nature.
As for Bpplas, my outlook is that crude oil prices will continue to be suppressed at the range of USD 50 for another 2 to 3 years to go. It could maybe end up lower as supply gluts persist, and a drop in demand will put the oil market into high wave rough waters. Of course, as crude oil price drop, raw material prices drop, and Bpplas will have a better control over their margins.
Now, put that to some simple technical reading, Bpplas had obviously traded below the support line of RM 1.44. The drop below is contributed from the weaker equity market sentiment, but it will not be significant as the fall did not consist of huge dumping in volume.
Speaking of dividend, the company had deliver a consistent quarterly dividend for the past 6 quarters.
For the latest 4 quarter, the total dividend distributed is 8 cents. At the current price of RM 1.36, the potential dividend yield is at 5.88%.
Being a net cash company, I would expect that Bpplas will continue it's dividend policy.
Now Bpplas is almost at the rock bottom price. However, should the coming result announcement reflect a better EPS, you can expect Bpplas to trade back above to the support price of RM 1.44.
http://bonescythe.blogspot.my/2017/08/plastic-and-packaging-always-go-hand-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+BonescytheStockWatch+%28Bonescythe+Stock+Watch%29
At a tough times like this, if you can be given a chance to spot a good company with profit and dividend record at a reasonable price - Would you invest now ?
That right - I found out that BP Plastics Holdings Berhad (Bpplas) might be the company suitable for this category.
Basically, Bpplas is involved in industrial packaging and stretch film manufacturing. This segment had been touted as a high potential segment due to the growing packaging demand in the Asia region. If you would want to have a in depth information on the products and offering of Bpplas, then it will be good for you to visit their website directly for more information.
As for me, I am going to share with you my analysis - Why I think Bpplas 2Q 2017 performance will be better than the 1Q performance.
One of the core reason for the drop of net profit reported for the performance on 1Q 2017 is due to higher resin price, with resulted to higher raw material input, hence reducing the gross profit margin. Now that the price of resin is somehow positively correlated to the movement of crude price oil, a higher crude oil price will result in a higher resin price, while a lower crude oil price will see a lower resin price - theoretically speaking.
So if this chart which show a supposing lower average of crude price in 2Q compared to 1Q, it is valid to assume on a lower price of resin, and hence, a lower input cost for Bpplas as a whole. Of course, you have the rights to doubt me on my point of sharing. However, I had did a similar analysis earlier on the share of Guan Chong Berhad (GCB), depicting that the lower cocoa prices will boost the business margin moving forward. That was done when GCB is trading around the range of RM 1.05. And as a matter of fact, GCB latest result display a higher net profit albeit seeing a drop in revenue. But that is not the important thing, because the important thing is that GCB went on trading at a high of RM 1.65, and that I am talking about almost 60% capital gain in nature.
As for Bpplas, my outlook is that crude oil prices will continue to be suppressed at the range of USD 50 for another 2 to 3 years to go. It could maybe end up lower as supply gluts persist, and a drop in demand will put the oil market into high wave rough waters. Of course, as crude oil price drop, raw material prices drop, and Bpplas will have a better control over their margins.
Now, put that to some simple technical reading, Bpplas had obviously traded below the support line of RM 1.44. The drop below is contributed from the weaker equity market sentiment, but it will not be significant as the fall did not consist of huge dumping in volume.
Speaking of dividend, the company had deliver a consistent quarterly dividend for the past 6 quarters.
For the latest 4 quarter, the total dividend distributed is 8 cents. At the current price of RM 1.36, the potential dividend yield is at 5.88%.
Being a net cash company, I would expect that Bpplas will continue it's dividend policy.
Now Bpplas is almost at the rock bottom price. However, should the coming result announcement reflect a better EPS, you can expect Bpplas to trade back above to the support price of RM 1.44.
http://bonescythe.blogspot.my/2017/08/plastic-and-packaging-always-go-hand-in.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+BonescytheStockWatch+%28Bonescythe+Stock+Watch%29
