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Dear members,
Mumbai-based Tokyo Plast International (C.M.P. Rs.9.63) has been gaining ground since a few
trading sessions and has crossed its previous 52-week high today.
Despite strong fundamentals, the stock had been lying low for quite sometime and could now be
in the middle of a re-rating.
Its plastics business has been facing margin pressure for some time now, thereby affecting
profitability. Sales have also been declining over the last two years.
This has been primarily on account of dumping of low value products by China into the
domestic market.
It has nevertheless managed to remain in the black and margin pressure is now expected to
ease, given the revaluation of the Chinese Yuan. Chinese exports should slow down.
Prices of raw materials like polypropylene and stainless steel are also easing.
The Management, however, feels that the overdue amounts are recoverable and diminution in
value of long-term investments is temporary. Hence, no provision has been made for the same.
Reliable market sources point out that the company has concluded a deal to sell its
Andheri property for a huge sum, believed to be in the region of Rs.150 to Rs.200 crores.
If market sources are to be believed, the company would make a one time after-tax windfall
of more than Rs.100 per share. (Assuming Rs.150 crores as the sale consideration)
However, I am not sure about the accuracy of the sale consideration being talked about, nor can I
confirm that the deal has actually been concluded.
Nevertheless, I can confirm that the property would be much more valuable than the original cost
and the company would incur a huge windfall as and when it sells it.
As for the stock, given that the fundamentals look good and given the possibility of land sale, the
stock could appreciate substantially from current levels.
Regards,
Kunal