KUALA LUMPUR (Nov 14) Thong Guan Industries Bhd rose three sen or 1.4% to its intraday high of RM2.10 after Insider Asia said the company's shares were being traded at attractive valuations.

Shares of the plastic packaging manufacturer later reduced gains to settle at RM2.08 at 12.30pm with 158,200 units changed hands.

Insider Asia said Thong Guan shares were being traded below its book value of RM2.89 a share and at a trailing 12-month price-earnings ratio (PER) of about six times.

This compared with a Bloomberg sector average PER of around 14 times

Insider Asia said in a report published in The Edge Financial Daily and theedgemarkets.com today that Thong Guan’s double-digit turnover growth over the past three years was a reflection of steady growth in global demand for plastic packaging.

Thong Guan's turnover increased to RM720 million in financial year (FY) ended December 31, 2013  from RM489 million in FY10. Its 1HFY14 net profit grew 55% to RM16.7 million from RM10.8million over the same period last year.

“In addition to the topline growth, Thong Guan also managed to expand its margins. This could be attributed, in part, to the company’s focus on research and development over the past few years, to produce higher value-added products that are more profitable,” said Insider Asia.

Insider Asia opined that the recent drop in crude oil prices would translate to lower raw material cost to produce Thong Guan's plastic packaging products.

Hence, cheaper crude oil bodes well for Thong Guan's profit margins, according to Insider Asia