PLABS - 8 FUNDAMENTAL POINTS YOU SHOULD KNOW (OCT 19)

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PLABS rebounded from its uptrend support today and entered our radar. We studied it on the spot and highlighted 8 points for you:

1) On July 22 2020, PLABS ventures into consumer goods distribution by acquiring 60% Thye On Tong Trading Sdn Bhd (TOT).

2) TOT has been involved in the business of distribution of consumer goods for more than 30 years.

3) TOT distributes consumer defensive consumer goods including oral care, homecare and baby care products.

4) TOT's clients include Mr DIY, NSK Group, KK Mart, The Store, Billion Shopping Centre and Alpro Pharmacy.

5) PLABS acquired 60% TOT at a “willing-buyer-willing-seller” basis, based on a PER of 8 times and a GUARANTEED PROFIT of RM2.25 million per annum.

6) 60% of guaranteed profit, RM1.35 million will go to PLABS. Adding that to PLABS’ core profit of RM4.1 million, PLABS could make a total profit of around RM5.5 million in the next 12 months after acquisition.

7) At a share price of 24.5 sen, PLABS is being traded at a 1-year forward PER of about 10.5 times.

8) ROE 6.9%, DY 4%, NTA 25.2 sen.

DISCLAIMER
Our study notes are for sharing purpose only. Valuation perspective is beyond scope. There is no BUY/SELL recommendation.