KUALA LUMPUR (June 30): PublicInvest Research has initiated coverage of polyethylene plastics films and bag manufacturer BP Plastics Holdings Bhd and said the company\u2019s return on equity (ROE) and return on assets (ROA) stood at 20% and 14.7% respectively, compared to its peer averages of 14.3% and 8.4% respectively.<\/p>\n
PublicInvest said the Johor-based company\u2019s solid ROE and ROA are attributed to its cost-rationalisation measures, coordinated pricing strategies and continuous upgrade of machinery and equipment.<\/p>\n
\u201cThese have enabled the group to withstand competitive pricing pressures within the industry,\u201d the research firm wrote in a note on Thursday (June 30).<\/p>\n
In a peer comparison chart, BP Plastics was compared to Scientex Bhd, Thong Guan Industries Bhd, SCGM Bhd and SLP Resources Bhd.<\/p>\n
\u201cWe initiate coverage of BP Plastics with a target price of RM1.40 based on a price-earnings ratio multiple of 13 times pegged at its financial year ending Dec 31, 2023 forecast (FY23F) earnings per share, though with a \u2018neutral\u2019 call given limited share price upside. [Its] prospective dividend yield [is] at 3.9%,\u201d added PublicInvest.<\/p>\n
PublicInvest stated that it likes BP Plastics for its steady growth, superior operational efficiencies and attractive dividends sustained by its healthy balance sheet.<\/p>\n
\u201cBP Plastics has registered steady revenue and earnings growth at compound annual growth rates of 6.6% and 7.1% respectively since its listing on Bursa Malaysia in 2005.<\/p>\n
\u201cDespite the challenging economic environment resulting from the Covid-19 pandemic, the group has managed to deliver a commendable financial performance for FY20 and FY21,\u201d said PublicInvest.<\/p>\n
It also highlighted that BP Plastics had consistently declared and paid dividends to its shareholders over the past five years with an average payout ratio of 52.7%, slightly higher than its dividend policy of distributing a minimum 40% of profit after tax to shareholders.<\/p>\n
However, PublicInvest is wary of the local producer\u2019s profit margin ahead with the impact of the surge in commodity prices due to rising crude oil prices caused by global supply chain disruptions and uncertainties from the Ukraine-Russia war.<\/p>\n
\u201cWhile the group\u2019s revenue is expected to trend higher on the back of capacity expansion and elevated average selling prices supported by robust demand for packaging films, the surge in production cost mainly due to rising material and freight cost is likely to weigh on its profit margin moving forward,\u201d PublicInvest said.<\/p>\n
At 10.49am, BP Plastics shares had increased one sen or 0.79% to RM1.28, bringing the company a market capitalisation of about RM360.36 million.<\/p>\n","protected":false},"excerpt":{"rendered":"
KUALA LUMPUR (June 30): PublicInvest Research has initiated coverage of polyethylene plastics films and bag manufacturer BP Plastics Holdings Bhd and said the company\u2019s return on equity (ROE) and return on assets (ROA) stood at 20% and 14.7% respectively, compared to its peer averages of 14.3% and 8.4% respectively. PublicInvest said the Johor-based company\u2019s solid ROE and ROA are attributed to its cost-rationalisation measures, coordinated pricing strategies and continuous upgrade of machinery and equipment. \u201cThese have enabled the group to withstand competitive pricing pressures within the industry,\u201d the research firm wrote in a note on Thursday (June 30). In a peer comparison chart, BP Plastics was compared to Scientex Bhd, Thong Guan Industries Bhd, SCGM Bhd and SLP Resources Bhd. \u201cWe initiate coverage of BP Plastics with a target price of RM1.40 based on a price-earnings ratio multiple of 13 times pegged at its financial year ending Dec 31, 2023 forecast (FY23F) earnings per share, though with a \u2018neutral\u2019 call given limited share price upside. [Its] prospective dividend yield [is] at 3.9%,\u201d added PublicInvest. PublicInvest stated that it likes BP Plastics for its steady growth, superior operational efficiencies and attractive dividends sustained by its healthy balance sheet. \u201cBP Plastics has registered steady revenue and earnings growth at compound annual growth rates of 6.6% and 7.1% respectively since its listing on Bursa Malaysia in 2005. \u201cDespite the challenging economic environment resulting from the Covid-19 pandemic, the group has managed to deliver a commendable financial performance for FY20 and FY21,\u201d said PublicInvest. It also highlighted that BP Plastics had consistently declared and paid dividends to its shareholders over the past five years with an average payout ratio of 52.7%, slightly higher than its dividend policy of distributing a minimum 40% of profit after tax to shareholders. However, PublicInvest is wary of the local producer\u2019s profit margin ahead with the impact of the surge in commodity prices due to rising crude oil prices caused by global supply chain disruptions and uncertainties from the Ukraine-Russia war. \u201cWhile the group\u2019s revenue is expected to trend higher on the back of capacity expansion and elevated average selling prices supported by robust demand for packaging films, the surge in production cost mainly due to rising material and freight cost is likely to weigh on its profit margin moving forward,\u201d PublicInvest said. At 10.49am, BP Plastics shares had increased one sen or 0.79% to RM1.28, bringing the company a market capitalisation of about RM360.36 million.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[62,64],"tags":[],"class_list":["post-7929","post","type-post","status-publish","format-standard","hentry","category-media-news","category-the-edge","post-no-thumbnail"],"yoast_head":"\r\n