KUALA LUMPUR (Aug 19): Lower exports, particularly to Japan, caused Thong Guan Industries Bhd’s profit to fall 11.6% to RM7.1 million or 6.75 sen per share in its second quarter ended June 30, 2015 (2QFY15) from RM8.03 million or 7.63 sen per share a year ago.

The latest quarterly revenue for the plastic packaging manufacturer also shrunk 11.6% to RM173.23 million from RM195.98 million a year ago, for the same reason, its filing to Bursa Malaysia today showed.

For the cumulative six months (1HFY15), higher realised foreign exchange losses, together with lower profit contribution from its Japanese customers, caused its net profit to fall 29.9% to RM11.73 million or 11.15 sen per share.

Its 1HFY14 net profit was at RM16.74 million or 15.91 sen per share.

Its cumulative 1HFY15 revenue fell 10.63% to RM334.02 million from RM373.73 million in 1HFY14, on lower selling prices — due to cheaper raw materials — and falling sales to Japanese customers.

The group did not declare dividend for the period under review. It paid a three sen dividend in the same period last year.

Moving forward, Thong Guan said it plans to expand its production capacity in 2016.

It will install a 33-layer nano-technology stretch film line and a state-of-the-art blown film line as well as set up its own research and development centre this year.

"Upon completion of this, the group expects to differentiate its products and services to its customers and move further up the value chain to achieve better profit margin," it said.

Barring any unforeseen circumstances, it is confident of the continuous progressive contributions from its business units and has chartered further growth prospects.

Shares in Thong Guan (fundamental: 1.85; valuation: 2) closed six sen or 3.6% higher at RM1.75, bringing its market capitalisation to RM184.12 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)