Today Nov 20, Texchem share price is closed at 0.96, an increase of 3 sen from my first posting(0.93). This equal to 3.2% of increment. This indicates that this stock is towards a rally state after hits its low at 89sen few months ago and stays at around 90sen level for quite a long time:approximately 4 months. My view on it remains: it is a good long term buy, by having a diversified range of businesses. On top of that, Texchem has a very good management team. As a proof, it disposed the Seapack Sdn Bhd following it's heavy looses due to the ban of seafood export to Europe imposed by European Union(EU) on Malaysian seafood. Texchem also disposed Texchem Consumers Sdn Bhd which distribute the Jordone brand toothbrush and Halls sweet in Malaysia. Texchem group operates few subsidiaries in Vietnam, Thailand, Singapore which promotes other source of income to the group. This enhanced the group viability in this tough economy condition and diverge the group's risks by not just operate solely in one country. In future, the management might spilt off the Sushi King division from the group and list it on KLSE.
This is based on:
1.Sushi King has built a strong brand among Malaysians.
2.Sushi King receiving recognisation awards yearly including 'Gold Bull Award'
3.Sushi King generates strong cash flow and profit growing steadily.
4. Ease of management if split off, and for the need of future expansion.
Based on the latest 3 quarters segmental result:
1. Industrial division:profit of 6.3 million
2. Packaging division:loss of 3.6 million
3.Family Care division:profit of 4.9 million
4.Food division:profit of 5.6 million.
It still very worth to buy Texchem now and keep it until it fruitful. Target price is RM1.60
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