The hunt to find decent export counters

From the Edge:

INVESTOR interest in the plastics manufacturing sector has picked up quite a bit in recent months, thanks to the weakening ringgit, falling raw material costs and signs of nascent global economic recovery led by the US.

BPP (Fundamental: 2.05/3, Valuation: 1.4/3) specialises in stretch and shrink films, an increasingly popular option for pallet stabilisation during warehousing and transportation of goods.

With a combined annual capacity (stretch film and packaging bags) of nearly 60,000 metric tonnes, the company is one of the top three stretch film manufacturers in Malaysia.  BPP’s track record has been patchy. Whilst the company has maintained topline sales growth by increasing export — which has grown from about 65% of sales in 2010 to 78% in 2014 — margins have been declining, due to fluctuating raw material prices and the ringgit as well as competition. Positively, some of these key variables are turning now in its favour. 

For 2014, revenue increased by 17.8% to RM284.0 million on higher demand in the export market although net profit was flattish due to higher utility and labour costs. In the latest 4Q2014 though, margins saw an encouraging uptick — which should improve further when the effects of lower input costs (closely correlated to oil) and strengthening US$ kick in. 

Insider Asia usually has pretty solid picks in its investments.  So today I was extremely happy to see an export counter.

In Malaysia, the struggle to find investment worthy export counters is real.   Most of the companies in Malaysia unfortunately can't compete on an international level.  So, the few that do are gems.

Although BP plastics is still somewhat small considering its revenues of 284 million, it does sport an attractive dividend.  The other industry that Malaysia does well in is in glove making, but most of those shares have run up quite a lot.  A small stake in BP plastics would be alright given its dividends, although more liquidity would be nice.  Its shares barely trade.