- Plastic products manufacturing & trading
- Food & Beverage manufacturing & trading
Its plastic products include stretch film (like Scientex), garbage bags, PVC food wrap etc.
Anyway, TGuan is still the largest manufacturer of PVC food wrap in Malaysia.
- Install thin stretch film machines with in-line pre-stretching capability & edge-folding
- Increase PVC food wrap production lines from 4 to 10 lines
- Install 33-layer nano-tech stretch film line
- Install its first blown film line
- Setting up an R&D center
- 11 stretch film lines (9 in Malaysia, 2 in China) with annual capacity of 80,000 MT
- Garbage bags lines with annual capacity of 40,000 MT
- 4 PVC food wrap lines with annual capacity 6,000 MT
From TGuan's 2014 annual report, it is mentioned that TGuan has successfully installed the thin stretch film line in 2014.
Besides, I believe that it will also increase the production capacity of its thin stretch film gradually.
Without these special items, TGuan's PATAMI should stay flat at around RM27mil since 2011.
This potential additional shares of 78.9mil shares is huge with a potential earning dilution of 75%, as TGuan's current outstanding shares are just 105.2mil.
Its profit may continue to grow due to penetration into new markets or Tokyo Olympic effect.
Its profit may also drop due to stiff competition, higher operating and raw material cost etc.
It might also implement another round of cash call for further expansion.
Earlier this year it suffered significant forex losses due to high USD denominated loans used for expansion.
It has recently pared down its borrowings substantially and I can foresee healthy cash flow in the near future.
Sales to its major export market Japan suffers a bit recently after the increase of VAT (value-added tax) in Japan from 5% to 8%.
However, TGuan still enjoys the largest market share (12%) of garbage bag in Japan.
I think this is a remarkable achievement for a small cap company.
I do not invest in SAM Engineering because of this similar reason. Just look at SAM now.