This company, primarily a manufacturer of bulk tissue paper and private label paper towels, bathroom tissues, and paper napkins, has been grouped into consumer tissues sector in personal care industry.
It seems that demand for consumer tissue products of companies in this sector has been weak since 2015 as indicated by continuing decrease in both sales volume and price for the typical companies ( sales volume growth rate in 2017 and 2016 : -1.5% and -1%). The demand, as reflected by first quarter sales of companies, seems to bounce back again after entering 2018.
Sales decline has resulted in increasing pressure on margins according to some typical company’s data. The typical companies’ gross margin is about 25% in 2017. With a about 13% SG&A as percentage of sales, the typical operating margin went down to about 13% in 2017.
The typical average stock price/cash flow ratio is about 26.
It seems that the sales for products of this company from existing market has been slightly declining in the past several years and sales from new developed market have not caught up yet.
The first three months fiscal 2018 compared with the same period of 2017
Net sales (including freight costs) increased 36.5% primarily due to increase in volume as new facility (new market).
The fiscal 2017 compared with the 2016
Net sales (including freight costs) decreased 1% primarily due to decrease of 5% in consumer paper products (both in price and volume) offset by increase of 94% in bulk paper (in volume).
The fiscal 2016 compared with 2015
Net sales (including freight costs) decreased 2% primarily due to decrease of 2% in consumer paper products (in volume) and increase of 14% in bulk paper (in price).
Fiscal 2015 compared with 2014
Net sales (including freight costs) increased 18% primarily due to increase of 16% in consumer paper products (22% in volume offset -5% in price) and decrease of 70% in bulk paper.
Its gross margin has decreased from around 19% in 2014 down to about 6% of 2017 due to increased fixed and overhead costs as a result of unused capacity. While its SG&A as percentage of sales was improved (about 7%), its operating margin still decreased to about -1.5% in 2017.
Stock performance
This stock currently has a stock price/sales ratio of 0.4. We think that its stock is being relatively undervalued considering that its unused capacity may get improved as sales catch up in new market.
