Tomypak down 2.3% on weaker results but gets upgrade from CIMB

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KUALA LUMPUR (Nov 17): Packaging product manufacturer Tomypak Bhd declined three sen or 2.3% after announcing weaker third quarter financials.

At 11.29am, Tomypak was traded at RM1.27 on thin trade of 80,000 shares. For comparison, the FBM KLCI fell 1.76 points or 0.1% to 1,812.03.

Rival packaging manufacturer Thong Guan Industries Bhd jumped 10 sen or 5% to RM2.21

Last week, Tomypak reported cumulative revenue for the nine months ended September 30, 2014 declined to RM158.9 million from RM171 million a year earlier.

Net profit was lower at RM4.55 million versus RM10.99 million due to high raw material and electricity costs.

Despite the weaker financials, CIMB Investment Bank Bhd upgraded its rating on Tomypak shares from "reduce" to "hold". CIMB also increased the stock’s target price to RM1.37 from 70 sen previously.

CIMB said Tomypak’s share price downside “looks limited” with floor support at RM1.30, hence the rating upgrade.

“We were negative on the stock since May due to the weak quarterly earnings results. Since then, its share price has been sideways.”

“However, it looks like its share price is finding support at RM1.30 level, which was the price that the new major shareholder, Yong Kwen On, acquired the 25.4% equity stake in the company,” CIMB said in a note today.