In Peter Lynch's One Up on Wall Street, he wrote that a p/e ratio thats half the growth rate is very positive and it is a measure he uses all the time in analysing stocks for mutual funds.
Looking at Tat Seng's growth rate FY2016-FY2017, it is roughly 40%. Its longer term growth rate FY2014-FY2017 is 114%. Now, take a look at its P/E ratio of 4.25. it is only about 1/10 of its FY2016-FY2017 growth rate.
It has been paying dividends annually since 2015 and at least 1 cent per year. It is doing something dull, which is ironically attractive in the eyes of Peter Lynch. Quoting him, a company that does boring things is almost as good as a company that has a boring name, and both together is terrific. If a company with terrific earnings and a strong balance sheet also does dull things, it gives you a lot of time to purchase the stock as a discount.
it expects" the corrugated paper packaging products market is seeing a positive turn with rising demand for corrugated products leading to opportunities for growth". It further explains that their China subsidiaries's ability to raise selling prices for the corrugated paper packaging products to be the main contributor to the increase in revenue and earnings.
It has also acquired new land for the building of a new production last year and "The Group is expected to commence the operation of its new production line of Nantong Tat Seng in the fourth quarter of 2018". This will further contribute to earnings and reducing costs.
Earnings have increased from 1.64m in FY2016 to 5.67 FY2018.
For the last 4 quarters, Return on Equity and Assets has been stunning double digit ranging from 12.97% to 22.12%.
Company has no debt and cash of $12m USD. In its annual report, the company is on track to open 100 outlets in China by 2020. In Oct 2018, the company has reached the halfway milestone of 50th outlet in China. The rapid expansion phase will contribute to higher earnings.
The CEO has also mentioned that the current trade wars has not impacted business opeations and earnings.
Cash increased from 10m to 12m approximately. Inventories decreased slightly, despite that the company is expanding more outlets.
In its press release, it also mentioned it will debut its outlet in Hong Kong in November 2018. "Despite ongoing trade war tensions, each of our business segment continue to grow". The company is expected to launch also in Philipines.
