Weak crude oil price a boon for SLP Resources

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KUALA LUMPUR(Oct 29): The weak crude oil price would be a boon to SLP Resources, a manufacturer of plastic packaging product.

According to The Edge Research, SLP saw its share price rise by 18.6% over the last four trading days, touching a year high of 72 sen. The positive sentiment may be attributed, in part, to the current slump in global crude oil prices.

The company was picked as the stock with momentum by The Edge Research yesterday.

SLP is a niche manufacturer of high quality flexible plastic packaging products such as polybags and polyfirms. The price of resin, the main raw material used in the production of plastic, is closely correlated to oil prices.

Concerns over supply glut has pulled down crude oil prices. With Brent crude hovering around US$85 per barrel, as compared to the US$110 per barrel in 2011-2013.

The Edge Research also opined that the company’s fundamentals are fairly decent, in a small net cash position at June 30,2014.

The company’s net profit margin increased from 4.1% in 2011 to 6.9% in 2013. It’s return of equity also improved from 7.9% to 13.0%.

As at 11am, SLP Resources Bhd edges up one sen to 71sen, with 1.06 million shares changing hands.