All is well with Ocean of cash..
Well.. as we mentioned before, there will be window dressing and its finally here..
In Malaysia, they indirectly supplied 100% of felt in Panasonic's aircond. On the other hand, they also export to countries like Australia, Thailand, Philippines, 20% of sales are based in USD.
4. They have 2 kind of felt where 1 is resinated felt (use for engine cover) and non-resinated felt. The low crude price had brought down the cost of this segment, though the growth in this segment is minimal but the margin had went up due to lower cost. This will help to increase the profit from this segment.
5. There are only 3 companies that produce felt in South East Asia where 1 is in Thailand and 1 is OCNCASH and another 1 is in Nilai.
Non - Woven Division1. The nonwoven segment is also a beneficiary from the low crude price as the raw material is related to crude oil. As a result, we will see increase in profit margin that boost the profit.
2. 2 in 1 nonwoven product is the current trend where it has several factors to fuel the growth of OCNCASH.
3. The company had modified their machines to increase the capacity for nonwoven production where this had increased their air-through non woven capacity by 100 tonnes/ month.
4. They are supplying their non-woven product to hygiene business producer such as those famous brand (can't put the name here). They are producing femine care products such as sanitary pads, party liners. breast pads as well as adult diapers. Most of the diapers are their clients except Mamipoko.
5. The utilization rate of the production is 80% at the moment after getting more orders from customers recently.
The management had also share there they are the beneficiary of strong USD as they are doing export as well as low crude oil price. These are just the theme that we are looking for, on the other hand this company have also got a production line expansion story where the production line will increase by 30%.
On the other hand, we also understand that the management is quite keen and have met a lot of fund managers. As a result, we saw that 1 of the fund had appeared in top 30 shareholder list. This can be check from the bloomberg portal which is only available to those corporate guys.
From the picture u can see that there are 2 funds that have invested into OCNCASH, where U can see at number 11 that AmAsia Pacific Equity Income have just invested in 31st October 2015. Looking at the date, we guess the cost of the fund is 36 cents and 37 cents.
Looking at number 17, we saw KAF Tactical Fund have just invested in 28th February 2015. The cost is about 30 cents.
Another thing is that the company have paid dividend recently, where this had open the road for some funds to invest in them, this is because some of the fund can only buy shares with dividend. We believe the management had open the road for fund to invest in them. As a result, we can monitor closely whether will there be any DBT or placement take place.
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Summary1. OCNCASH has a theme of Lower raw material cost due to lower Crude Oil Price
2. Beneficiary of Strong USD as they have 70% revenue is from exporting segment.
3. The expansion of production line which help to boost the top and bottom line.
4. Changing listing from Ace market to Main market.
5. There are fund that invested in them and we believe this is just the beginning.
7. The good result of NTPM had causes the share to move, which we believe this will causes OCNCASH to get re-rated as this counter is now trading at 10 times annualized PE.
We remain our TP of 50 cents for mid term and long term is 60 cents.