Tat Seng Packaging Group Limited (T12.SI) is one of Singapore’s leading manufacturers of corrugated paper packaging products. With two production facilities in Singapore and five more in China, Tat Seng Packaging serves a broad range of industries.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Customers include manufacturers in the food and beverage industry, the electronics and electrical industry, the plastic and metal stamping industry, the pharmaceutical and chemical industry as well as in the printing, publishing and converting industry in Singapore and China.
Founded in 1968 Tat Seng Packaging is headquartered in Singapore and is listed on the mainboard of SGX since September 2001. Hanwell Holdings Ltd, a leading provider of consumer essentials in Singapore, holds 64% of Tat Seng Packaging’s shares.With a market capitalization of 62.09m SGD, Tat Seng Packaging is a relatively small company with no obligation to report quarterly
With a market capitalization of 62.09m SGD, Tat Seng Packaging is a relatively small company with no obligation to report quarterly results, but has all the ingredients a value investor likes to see. A staff of 428 people generated revenues of 213.4m SGD and a net profit of 13.2m SGD in 2015, an increase of 38% compared to 2014. In a highly competitive environment Tat Seng Packaging was able to maintain an operating margin of 8.2%. Earnings per share grew by 29% in 2015. On a five year average, EPS grew by almost 15% and is the highest among its industry peers.
The company generated last year a strong cash flow of 33.1m SGD from its operating activities which translates into a healthy price/cash flow per share of 3.15. A strong cash position of 33.4m SGD allows the company to pursue its business expansion plans and to capitalize on opportunities that arises.
Although dividend growth has been flat over the last years, the dividend yield is at more than 5%. A price to book ratio of 0.63 indicates undervaluation and an equity ratio of 51% shows a stable financial position. Last but not least the company is valued at only five times its earnings, compared to 41 in its industry peers.
Despite uncertainties in the economic outlook in Asia and a further contraction of Singapore’s manufacturing sector the company remains confident to grow by increasing its market share especially in the food and pharmaceutical sector and by productivity improvements. China accounts for around 84% of Tat Seng Packaging’s revenues which makes the company depended on the further development in the country. Higher USD exchange rates may have a negative impact on profit margins as the company sources its raw materials mainly from suppliers in the USA, Thailand, Malaysia and China.
Nevertheless we like Tat Seng Packaging’s solid financial standing and the management which has shown capabilities to tackle with a difficult economic environment. A look on the chart shows an uptrending 200 day moving average and a recent MACD signal. With a bit of a tailwind the share could more than double in the next 12 months.
AIS Rating: ★★★★☆
| 2011 | 2012 | 2013 | 2014 | 2015 | |
|---|---|---|---|---|---|
| EPS (SGD cents) | 2.83 | 4.92 | 7.53 | 6.04 | 7.92 |
| Change | -29% | 74% | 53% | -20% | 31% |
| P/E | P/E Industry |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 5 | 41 | 0.6 | 3 | 50% | 13% | 34% | 5% |
* Equity / Total Assets, ** Total Liabilities / Equity
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