Bp Plastics Holding Bhd

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by PBIV

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Public
Neutral - TP RM1.62

"Broadly In Line"

BP Plastics Holding Berhad (BPPLAS) reported a sequentially stronger 2QFY24 net profit of RM8.6m (+13.4% QoQ) on sustained demand and lower effective tax rate. Cumulative 1HFY24 net profit of RM16.2m is broadly within our and consensus estimates, accounting for 39.4% and 45.2% of full-year estimates, respectively. We maintain our estimates, with expectations of demand continue to improve driven by rebound in global trade while costs remain under control. A second interim dividend of 1.5 sen per share was declared, bringing YTD dividend to 3.0 sen per share (6MFY23: 3.0 sen per share). We maintain our Neutral rating on BPPLAS with an unchanged TP of RM1.62.

Analyst:
Denny Oh
research@publicinvestbank.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Outperform - TP RM1.42

"Cost Concerns Priced In"

BPPLAS’s 1HFY24 results met our expectations. Despite an 8% revenue growth, its 1HFY24 core net profit eased 1% YoY as rising operating costs more than offset the increase in sales volume for plastic packaging. While market demand remains sluggish, the company is focusing on expanding its product range with an emphasis on higher-margin products to mitigate cost pressures which should flow into 2025 earnings. While maintaining our forecast and TP of RM1.42, our call is upgraded to OUTPERFORM (from MARKET PERFORM) following recent price weakness.

Analyst:
Thin Yun Jing
thinyj@kenanga.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by CGS
Hold - TP RM1.57

"Higher revenue offset by elevated costs"

■ 1H24 core net profit fell by 13.5% yoy to RM16.3m, making up 44.6% of our FY24F estimate, as higher revenue was offset by elevated production costs.
■ Underlying demand for packaging products should grow in 2H24F as economic activities improve, in our view.
■ Reiterate Hold with an unchanged TP of RM1.57, based on 11x CY25F P/E (its historical mean).

Analysts:
Shafiq KADIR
shafiq.abkadir@cgsi.com
Prem Jearajasingam
prem.jearajasingam@cgsi.com

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Public
Neutral – TP RM1.62

“Headwinds Remain"

A recent meeting with management reaffirms our cautious optimism stance on BP Plastics Holding Berhad (BPPLAS). While near-term outlook may continue to be challenged by elevated production cost, the Group is showing signs of recovery as demand for the packaging products gradually picking up, underpinned by restocking activities. We also take note that the Group is well-placed to weather economic uncertainties given its debt free capital structure with a total cash level of RM67m. This enables it to capitalise on the next demand up-cycle with the production capacity expansion completed recently in 4Q23. We keep our earnings forecast unchanged. Our Neutral call on BP Plastic retained with an unchanged PE-based target price of RM1.62.

Analyst:
Denny Oh
research@publicinvestbank.com.my

PETALING JAYA: BP Plastics Holding Bhd is looking for a 10% sales volume growth for the financial year 2024 (FY24), driven largely by export sales of premium products such as thinner gauge nano stretch film.

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Market Perform – TP of MYR 1.42

“New Products to Bolster Margins”

BPPLAS guided for a 10% sales volume growth for FY24, driven
largely by export sales of premium products such as thinner gauge
nano stretch film. Its new higher-margin stretch hood product and
blown film packaging product used in the F&B sector should cushion
over margins amid rising costs. We maintain our forecasts, TP of
RM1.42 and MARKET PERFORM call.

Analyst(s):
Thin Yun Jing
thinyj@kenanga.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Market Perform – TP RM1.42

“Cost Pressures Weigh"

BPPLAS’s 1QFY24 results disappointed. Its 1QFY24 core net profit was flattish YoY as a 6% top-line growth was negated by highe cost. It is focusing on high-margin products and broadening its products range to counter the rising cost pressure. We cut our FY24-25F earnings forecasts by 15% and 14%, respectively, but maintain our TP of RM1.42. Downgrade to MARKET PERFORM from OUTPERFORM after the recent run-up in its share price.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by CGS
Hold (no change) – TP RM1.57

“1Q24 in line despite higher production costs"

■ 1Q24 core net profit of RM7.7m was within expectations at 21.1% of our FY24F estimates. We expect further demand recovery moving into 2H24F.
■ BPP’s Board of Directors proposed a 1.5 sen first interim dividend which is within our forecasts. We estimate FY24-26F yields of c.4-5%.
■ Reiterate Hold with TP of RM1.57 based on 11x CY25F P/E (its historical mean). Market has adequately priced in an earnings recovery, in our view.

Analysts:
Jeremy MOK
E jeremy.mok@cgsi.com
Prem JEARAJASINGAM
E prem.jearajasingam@cgsi.com

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by PIB
Neutral – TP of MYR 1.62

“Dragged by Higher Production Cost”

BP Plastics HoldingBerhad (BPPLAS) reported an 8.1% YoY decrease in net profit to RM7.6m (-22.3% QoQ) for 1QFY24 despite recording higher revenue, attributed to higher production costs. Results were below our and consensus expectations, accounting for only 18.4% and 19.3% of full-year estimates, respectively. We trim our earnings estimate for FY24/25 by 10% to account for higher cost of production. Despite that, our PE-based TP revised higher to RM1.62 (previously RM1.46) as we rollover our valuation to FY25F. Our Neutral call retained. On a side note, BPPLAS declared a first dividend of 1.5sen (1QFY23: 1.5sen).

Analyst(s):
Denny Oh
research@publicinvestbank.com.my

BPPLAS - Notice of Book Closure

General Meetings: Outcome of Meeting

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

First Interim Dividend

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by CGS
Hold – TP of MYR 1.53

“Demand recovery adequately priced in”

Asia (ex-Malaysia) remains the largest market for BP Plastics Holding (BPP), accounting
for c.60% of FY23 revenues. Based on discussions with management, we think the
recovery in travel and tourism has benefited consumption in these key markets, resulting
in greater demand for packaging materials. BPP’s revenues have historically moved in line
with the manufacturing IPI for plastic packaging (Fig 4) and exports of plastic film and sheet
(Fig 5), which have grown at CAGRs of 3.6% and 7.1%, respectively, over 2012-19 (preCovid). Our FY24-26F revenue estimates bring its 3-year CAGR to 6.0%, in line with
historical trends.

Analyst(s):
Jeremy MOK
jeremy.mok@cgsi.com
Prem JEARAJASINGAM
prem.jearajasingam@cgsi.com

PLASTIC PACKAGING
$TGUAN / 7034 (THONG GUAN INDUSTRIES BERHAD) $BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Overweight

“Restocking, Product Innovation Drive Sales”

We upgrade our sector call to OVERWEIGHT from NEUTRAL. Players have guided for stronger flow of orders over the immediate term, driven by customers restocking activities ahead of price hikes stemming from rising resin prices, and overwhelming response to their sustainable packaging materials. Also, local players have gained market share from their overseas peers, capitalising on lower energy cost and innovative products such as nano stretch film and mono film that tick the sustainability box. Our sector top picks are TGUAN (OP; TP: RM2.86) and BPPLAS (OP; TP: RM1.42).

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

BP Plastics Holding Bhd is likely to enjoy sustained recovery, given its strong presence in South-East Asia, which is expected to remain resilient despite global economic uncertainties.

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Outperform – TP of RM1.42

“Looking Up”

BPPLAS guided for a sustained recovery underpinned by, among others, a robust air travel market which translates to higher demand for plastic packaging used for transportation and storage purposes. It also expects higher sales for its high-margin thinner gauge stretch film and technical customised blown film. We raise our FY24F and FY25F earnings forecasts by 4% and 3%, respectively, lift our TP by 16% to RM1.42 (from RM1.23) and upgrade our call to OUTPERFORM from MARKET PERFORM.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Kenanga
Market Perform - TP of RM1.23

"Niche Products to Cushion Slowdown"

BPPLAS’s FY23 results met expectations. Its FY23 core net profit rose 7% driven by an improved product mix. It is cushioning the slowdown in the plastic packing sector by stepping up the production of premium stretch film and value-added blown film. We maintain our FY24F net profit forecasts, TP of RM1.23 and MARKET PERFORM call.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by PB
Neutral - TP of RM1.46

"Commendable Finish"

BP Plastic Berhad (BPPLAS) reported a stronger quarter with 4QFY23 net profit of RM9.8m (+80.3% YoY, +35.4% QoQ) attributed to better product mix and favourable foreign exchange position. This brings full year FY23 net profit to RM35.2m, which came in largely in line with both our and consensus expectations, accounting for 116.7% and 107.9% of full-year estimates, respectively. No change to our forecasts. While we remain positive on the long-term prospects of BPPLAS and sustained demand for plastic packaging products, near-term outlook for the Group may continue to be challenged by weak industry dynamics. We maintain our Neutral call with an unchanged PE-based TP of RM1.46 (10x FY24 EPS). BPPLAS declared a final dividend of 1.5 sen, bringing total dividend for FY23 to 6.0sen (FY22: 5.5sen).

Analyst(s):
Denny Oh
research@publicinvestbank.com.my

BPPLAS - Notice of Book Closure

Fourth Interim Dividend

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD) $CYL / 7157 (CYL CORPORATION BERHAD) $LCTITAN / 5284 (LOTTE CHEMICAL TITAN HOLDING BERHAD) $SCIENTX / 4731 (SCIENTEX BERHAD)

@portoftheyear

$MFCB / 3069 (MEGA FIRST CORPORATION BERHAD) 20%
$KPPROP / 7077 (KERJAYA PROSPEK PROPERTY BERHAD) 20%
$BPPLAS / 5100 (BP PLASTICS HOLDING BHD) 20%
$DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD) 20%
$E&O / 3417 (EASTERN & ORIENTAL BERHAD) 20%

Stocks Related to Plastic Packaging

The plastic packaging sector experienced a downturn in 2023, attributed to sluggish global economic growth and persistent supply chain disruptions impacting end-users. Despite this, it remains a crucial component for various industries such as food and pharmaceuticals. In Malaysia, several prominent companies operate within this sector, primarily focused on stretch film and flexible packaging. Could the stabilizing oil prices help maintain their margins? Here are a few companies with substantial business in the plastic packaging industry in Malaysia!

*The list is non-exhaustive

$SCIENTX / 4731 (SCIENTEX BERHAD) $TGUAN / 7034 (THONG GUAN INDUSTRIES BERHAD) $BPPLAS / 5100 (BP PLASTICS HOLDING BHD) $SLP / 7248 (SLP RESOURCES BERHAD) $TOMYPAK / 7285 (TOMYPAK HOLDINGS BERHAD)

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by CGSCIMB
Add (no change) - Target Price RM1.39

"Leaner operations but ASPs still pressured"

■ 9MFY23 core net profit of RM26.0m was above expectations at 80.9% of our FY23F estimate and 80.3% of Bloomberg consensus.
■ Newer, more efficient machines and demand from local F&B clients a boon to operating efficiencies. 9MFY23 EBITDA margin was 11.7%, up 2.0% pts yoy.
■ We reiterate our Add rating with a TP of RM1.39, based on an 11x CY24F P/E multiple, BPP’s average historical 1-year forward P/E.

Analyst:
Prem JEARAJASINGAM
prem.jearajasingam@cgs-cimb.com

$BPPLAS / 5100 (BP PLASTICS HOLDING BHD)
Research by Public Investment Bank
Neutral – Target Price RM1.46

“Ready for Next Demand Up-Cycle”

BP Plastic Berhad (BPPLAS) reported a stronger quarter with 3QFY23 net profit of RM7.3m (+35.6% YoY) attributed to better product mix, though weaker QoQ (- 26.4%) owing to higher production cost. Cumulative 9MFY23 net profit of RM25.3m (+1.3% YoY) is within consensus but above our expectations, accounting for 77.8% and 84.1% of full-year estimates, respectively. Our forecasts are kept unchanged. While we remain positive on the long-term prospects of BPPLAS, near-term outlook for the Group may continue to be challenged by weak demand for industrial and logistic packaging amid the global economic weakness. We maintain our Neutral call with an unchanged PE-based TP of RM1.46 (10x FY24 EPS). On a side note, BPPLAS declared a third interim dividend of 1.5 sen (3QFY22: 1.0sen).

Analyst:
Denny Oh
research@publicinvestbank.com.my