28 April 2012

Three-A Resources Week 17 (23-27 April) Stock Picks Commentary

Stock Picks #1
Three A Resources Bhd (3A)

Week high : RM 1.35 (Up 12 sen - 14%)

On 23 April, AmReseach wrote that Three-A Resources Bhd's hydrolyzed vegetable protein plant in China will commence operations this month and is expected to account for 5% earnings in 2012 and 23% in 2013.

To recap, in late 2009, Wilmar International Ltd took up a 15.65% stake in Three-A. The plant is located near Wilmar's existing plant including Qinhuangdao Goldensea Foodstuff Industries Co Ltd, China’s largest soya protein producer.

Hence, it is widely expected that Wilmar will channel Three-A's products through its extensive sales and distribution network in China to food processors, particularly soya sauce producers.

Market took this news positively as the additional capacity and opportunity to leverage on Wilmar's established sales and distribution network in China are both beneficial to Three-A's financial performance from 2012 onwards.

3A stock rose 14% (12 sen) since 23 April to week’s highest RM 1.35 on 25 April and closed at RM 1.23 at the end of this week.

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