Share price 1.61
Market Cap: RM 121 million
Orna paper is involved in paper packaging industry and their major business is manufacturing of corrugated board and carton and paper stationery products.
Orna Paper share price had gone up 71% since Jan 2017. Today, 13 November 2017, the third quarter result is out. Let's review it
Year On year Comparison
Single quarter
Revenue went up 31% for the current quarter due to 1)higher sales volume, 2)higher average sales price. Net profit attributable to shareholder increased at slower pace of 7.5% due to higher raw material cost as well as high taxes incurred in this quarter. The sales volume and average selling price for corrugated cartons and boards has increased by 15.63% and 13.74% respectively compared to the corresponding quarter
Year to date
Revenue increased 20% while profit increased 65%. This 9 month net profit has surpassed last year full year net profit of around 7.7 million.
The company is currently sitting on Net Debt to Equity ratio of 34.5%.
Besides that, inventory increased substantially in this quarter, probably the company foresee that the raw materials price could be increasing further, or they might have higher sales order coming in as the demand for paper packaging is robust now.
Dragged down by increasing of working capital, the operating cash flow for this quarter is in negative territory, this certainly not a good sign for company if persist for a long period especially when they need to borrow more money to fund the business operation.
As a midstream player, despite the increase of raw materials cost, Orna ability to pass through the cost to its customers is one of the core reason for such an outstanding performance. Not only that, the demand of paper packaging is indeed in an increasing trend.
Valuation:
Trailing 12 months PE : 9.7
Conclusion:
Overall this quarter result is quite satisfactory and the business will continue to grow despite the increased of raw materials price. Next quarter result should be doing well too as Malaysia e-commerce sales on 11 November 2017 is impressive.
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