OceanCash Pacific Bhd

OCEANCASH Pacific Bhd is a manufacturer and exporter of resinated and thermoplastic felts, noise and carpet underlays that function as heat and sound insulators. 

Its products are used in automobiles, as noise dampeners in compressors of air conditioners and as insulation for buildings, including in roofs, partitions, walls and flooring. The company has plants in Malaysia and Indonesia and a trading company in China, where it is trying to aggressively penetrate the market.  

The company operates in a fairly niche business segment, and yet rides on the strong growth in the sectors its products are used in — namely, the automobile and property markets. This provides the company with high consistent margins and growing sales. 

Between 2008 and 2013, Oceancash saw consistent sales growth. In 2013, it posted 148% rise in net profit to RM6.5 million despite a smaller 17% increase in revenue to RM68.6 million. Over the years, the company has been able to maintain double-digit operating margins with its net margin in 2013 approaching the 10% mark. 

Going forward, the company’s ability to maintain healthy is promising, backed by strong demand growth in the automobile and property markets in its existing markets. Its felts factory in Indonesia started production in Dec 2011 and was already operating at full capacity in the last quarter of 2013. Expansion into new markets, particularly China, will underpin Oceancash’s future growth.

Oceancash has a strong balance sheet with a low 3.72% gearing. Its dividend payout increased from 0.2 sen in 2011 to 0.4 sen per share in 2013, which translates to a 1.37% yield. The stock is trading at an attractive trailing 12-month P/E of 8.1 times and a price-to-book ratio of 1.2 times.

This article first appeared in The Edge Financial Daily, on October 10, 2014.