This article first appeared in The Edge Financial Daily, on December 11, 2015.

Thong Guan Industries Bhd (-ve)

SHARE price of Thong Guan (Fundamental: 2.5/3, Valuation: 1.4/3) continued to rise after announcing its 3Q2015 earnings results last month.  The stock, one of InsiderAsia’s Top 10 picks for 2015, has risen by 51.7% year-to-date, outperforming the KLCI by 58.1%.

For 3Q2015, net profit surged 129.0% y-y to RM11.3 million, boosted by higher margin export sales which are mainly denominated in USD. Revenue, meanwhile, declined 5.0% to RM182.3 million, largely due to lower selling prices, following decline in raw materials prices.

Kedah-based Thong Guan mainly manufactures plastic packaging, including cast pallet stretch film, garbage bags and PVC food wraps. The company is a beneficiary of the stronger USD as export accounted for 78.4% of its revenue in 2014.

The stock trades at a 22.6% discount to its book value of RM3.59. The company paid dividends consistently, since 2004. For 2014, dividends totalled 7 sen per share, giving a net yield of 2.5%.