Finally, KLSE index finally comes down after being pushed up 50 points within 3 weeks time. In fact, it's global effect, where KLSE index is just a follower. Another minor correction? Never mind, we don't have to guess it, overall we are still ride on this bull trend. Most probably the game is just begin. It's happy to see some blue chips price are dropping steadily.
Look at my latest watch list, I've short listed a few potential companies these few days. Let's put aside the 4 companies I listed in my previous post, their prices will definitely come back soon, just like SUPERMX did today. In contract to glove markers, I would like to highlight DAIBOCI and TOMYPAK today.
In contrast, DAIBOCI and TOMYPAK also facing the same problem with glove makers, which their material cost are rising propotionnately. Their share prices also falling down from the peak for a couple of months already. They are getting worse when they have just announnced their latest quarter financial result lately. But it seems their share prices are getting stabilized these few days.
Fortunately, both of these companies majority customers are based in local, they don't face much ringgit appreciation pressure. Another edge these plastics makers have over glove makers is that, they offer very high dividend yield to their investors, about 5-6% annually, where glove makers took their profits for expansion but the demand is already starting to normalize when their new expansion are ready.
Unlike glove makers, DAIBOCI and TOMYPAK are working with major customers to switch from high cost to lower cost material. Even though it takes some times, but eventually they able to resolve the high material cost problem which will affect their profits. Besides, the plastic and packaging demand is yet to be normalized. Do you see how potential these 2 companies are?
Furthermore, by looking at both companies PER, they are still consider very low, especially TOMYPAK, at around 2.9! If they managed to recover by coming quarter, it should be a safe bet on them. To me, I prefer to invest on TOMYPAK, because of it's super low PER, higher dividend yield, and high RoE of 48%.
However, there are 2 major problems about these 2 stocks, they are low volatility and lack of fund manager buy-in. TOMYPAK has split the share price a couple of months back and the volatility has slightly improved. Nonetheless, I feel like TOMYPAK is just another HARTA. Let time speaks the outcome.
Note: The post above is just my personal opinion. I'm not held responsible for any of your trading decision. :)
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