07-05-2015, 11:23 PM (This post was last modified: 08-05-2015, 08:42 AM by Curiousparty.)
Tien Wah Annual Report (2014)
2014 was a difficult year for the Group. The main industry in which we operate in, continued to undergo dynamic changes. This in return
had a direct impact on our business.
The introduction of Graphical Health Warning on packs for Vietnam’s market was one significant impact on our business as we saw a
drastic drop in demand. Increase in excise duties continued to dampened demand on the major industry players as this resulted in an
increasing prevalence of illicit products.
The Group as a whole, continued to face severe challenges as our major customer raised their level of expectations on quality and
deliveries. This demanded further process changes as well as implementation of new resources for the Group. The Board then approved a restructuring of the production footprint within the Group to improve strategic positioning to service the customers and reduce operating cost over the longer term. As a consequence of the restructuring, a redundancy expense of RM2.0 million was recognised. There was also a one-off sales rebate of RM5.9 million incurred during the year.
These events contributed to an overall decline in both revenue and profit for the year. While the Group is still profitable at RM13.5 million,
revenue declined by 7.0% or RM26.7 million and net profit reduced by 44.8% or RM11.0 million as compared to 2013. Our balance
sheet remains favourable with the Group’s net assets (excluding non-controlling interests) increasing by 3.3% to RM236.7 million from
RM229.1 million. Debt levels increased slightly from RM72.9 million to RM74.0 million, due to the implementation of new resources
mentioned above. The business also continued to generate cash positively in the year under review which amounted to RM60.0 million
(2013: RM58.3 million).
OUTLOOK FOR 2015 The market, in which we operate in, continues to show uncertainty. The challenges of 2014 are expected to continue in 2015. We have
also seen increasing activities among our competitors as they continue to expand their presence in Asia. As the competition intensifies,
the demand on quality and delivery expectations would be even greater.
To overcome these severe challenges, it is paramount for the Group to look beyond our current footprint and customers’ base. The Group would continue to explore new opportunities while driving total cost downwards.
The Group remains positive that we have the knowledge, capabilities and resources to continue to grow the company in both revenue and
profits. Our strategy of focusing on being a business partner to our customers to help drive efficiencies, cost reductions and innovation
would remain as our top priority.
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New Toyo cut dividend last year from 1.7 cents to only 1.2 cents.
Q1 result was again worse than expected. Would dividend be cut again this year?
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
The share price of Tien Wah on Bursa shot up from RM$1.80 to around RM$2.40 soon after announcement on 11 Nov 2015 of good Q3 results. The share price today at the time of this posting is RM$2.54.
New Toyo on SGX also announced on 12 Nov 2015 good Q3 results as a consequence of Tien Wah. But its share price hardly moved, hovering over S$0.20
(16-11-2015, 03:33 PM)budgetier Wrote: The share price of Tien Wah on Bursa shot up from RM$1.80 to around RM$2.40 soon after announcement on 11 Nov 2015 of good Q3 results. The share price today at the time of this posting is RM$2.54.
New Toyo on SGX also announced on 12 Nov 2015 good Q3 results as a consequence of Tien Wah. But its share price hardly moved, hovering over S$0.20
Why?
cost of sales has gone down somewhat probably due to vietnam factory.
however revenues are still not that great. Dividend has also been cut. Sentiment on SGX has been quite poor as well and interest in NT has probably waned.
20-11-2015, 01:21 PM (This post was last modified: 20-11-2015, 08:02 PM by portuser.)
(16-11-2015, 03:33 PM)budgetier Wrote: The share price of Tien Wah on Bursa shot up from RM$1.80 to around RM$2.40 soon after announcement on 11 Nov 2015 of good Q3 results. The share price today at the time of this posting is RM$2.54.
New Toyo on SGX also announced on 12 Nov 2015 good Q3 results as a consequence of Tien Wah. But its share price hardly moved, hovering over S$0.20
Why?
After the release of 3Q results on 12 November 2015, Tien Wah share has been surging, hitting RMB 2.69 yesterday, a far cry from the RMB 1.80 in the recent past. (The highest in 2013 was RM 2.69 too recorded in December, and in 2014, RM 2.68 done in January.)
Tien Wah's 3Q group profit of RM 16m is nearly three times RM 5.6m of the same period last year.
This is quite high, because the best-ever quarterly profit achieved before was RM 13.4m, in 2Q 12. (In that year, Tien Wah's 12-month group profit peaked at RM 40.4m.)
It should be noted in 3Q, Tien Wah changed its conservative practice to reflect the longer useful lifespans of certain plant and machinery. However, 3Q profit is still high even if the RM 3.2m adjustment (RMB 2.1m for the first half and RM 1.1m for 3Q) is excluded.
Tien Wah's 2014 group profit was low, RM 15.8m against RM 40.4m in 2012 and RMB 33.8m in 2013.
In his message to shareholders in 2015, Mr Yen Wen Hwa, Tien Wah executive chairman, stated:
"The Group as a whole, continued to face severe challenges as our major customer raised their level of expectations on quality and deliveries. This demanded further process changes as well as implementation of new resources for the Group."
A year earlier, Tengku Mahaleel, non-executive chairman told shareholders:
"The third significant event was the new challenge our major customer set us, which was to reduce quality issues by 50% within a year, in order that our
key customer could supply to more quality demanding overseas markets. This demanded a new set of process and resources of the Group."
The need to address quality issue might have led Mr Yen to come out of retirement to helm Tien Wah in February 2015. (He founded New Toyo in the seventies and retired in September 2011.)
Investors in Malaysia may be expecting that with Mr Yen's interventions, Tien Wah is now on a recovery path. (In September 2010, Mr Yen doubled up as Tien Wah CEO to overcome the challenges posed by the introduction of short-run printings; and Tien Wah's group profit rose to RM 38.4m in 2011 and RM 40.4m in 2012 from a low of RM 18.9m in 2010.)
Or are they expecting huge benefits from the planned redevelopment of the 1.3-hectare factory site in Petaling Jaya for commercial use?
As New Toyo owns 54% of Tien Wah, share prices of the two ought to be correlated in theory, but they are not in practice.
(23-11-2015, 02:04 PM)Young Investor Wrote: New Toyo and Tien Wah have not updated the renewal of the exclusive supply contract with BAT. There is some uncertainty...
The contracts won by Tien Wah in 2008 was to supply cigarette cartons to certain factories of British American Tobacco (BAT) for seven years plus a renewal option "for an additional three (3) years on terms no less favourable than what is offered by bona fide third party suppliers".
Before the contracts expired on 1 November 2015, BAT extended them for one year with the same renewal right for Tien Wah.
Cost advantage, arising from lower wages and taxes in Vietnam, enjoyed by Tien Wah's printing factories in the country, might have been one favourable factor considered by BAT.
There is reason to believe that the cost advantage has not been eroded because a printing line from Australia was recently relocated to Vietnam.
The recent decision to depreciate equipment over longer periods may suggest that contract renewal is very likely. Otherwise, assets that are now fulfilling current BAT's requirements will soon be redundant and have to be impaired.
New Toyo recently reported sterling performance for its 4th quarter and full year ending 31 Dec 2015. It proposes to pay a final dividend of 1 ct, bringing the total dividend payout for the year to 1.6 cts or 7.1% of last Friday’s closing price of 22.5 cts. Am wondering over the sterling performance given that the company had expected its business conditions to remain challenging for the year in view of the uncertainty in global economy and likely increases in interest rates and other business costs. What had gone right or been done right? Wld appreciate comments from readers.
(27-02-2016, 03:55 PM)budgetier Wrote: New Toyo recently reported sterling performance for its 4th quarter and full year ending 31 Dec 2015. It proposes to pay a final dividend of 1 ct, bringing the total dividend payout for the year to 1.6 cts or 7.1% of last Friday’s closing price of 22.5 cts. Am wondering over the sterling performance given that the company had expected its business conditions to remain challenging for the year in view of the uncertainty in global economy and likely increases in interest rates and other business costs. What had gone right or been done right? Wld appreciate comments from readers.
Tien Wah, 54% owned by New Toyo, has proposed a one-for-two rights issue at RM1 apiece (a huge discount to the latest share price of RM 2.79) to "raise funds for its expansion into the Middle East region and/or Indonesia without incurring interest cost compared to bank borrowings".
The exercise will gross RM 48.2m, but the proposed 14-sen final dividend (to be payable on 30 June 16) will amount to RM 13.5m.
Why is Tien Wah going through a rights issue for RM 34.7m (48.2m - 13.5m)?
Tien Wah's 2015 group profit was RM 35.8m (a mere RM 6m in the first half). In addition, depreciation & amortisation amounted to RM 35.7m.
Tien Wah's balance sheet was strong, with cash matching bank borrowings as at end-2015:
.......................................RM m Shareholders' fund............132 PPE...................................242 Cash....................................71 Borrowings..........................72
Unless the planned expansion is very substantial, the proposed rights issue seems unnecessary.
Tien Wah's strong showing helped New Toyo to book a group profit of $ 20.6m in 2015 ($6.2m in first half).
New Toyo's balance sheet is far stronger than Tien Wah's, with net cash of $51m:
..........................................$ m Shareholders' fund............212 PPE.....................................85 Cash....................................79 Borrowings...........................28
It 38.6c NAV is understated as the value of its land holdings likely far exceeds the book value.
New Toyo itself used to buy real estates for businesses in several countries. Although some businesses have ceased, the properties are retained for rental incomes.
As at end-2014, the market value of the investment properties was $ 25.7m vs book value of $8.4m, giving rise to a surplus of 4c per New Toyo share.
Tien Wah has planned to partner Lum Chang to redevelop its factory in Petaling Jaya into a commercial property. The site's area is 140,000-sq ft; and the combined value of the factory and land was RM 26.5m as at end-2014
Tien Wah also owns a factory in Smithfield (30 km from the Sydney CBD and near the second airport that is to be constructed). The land area of 358,000 sq ft (the size of four football fields) and floor area of 150,800 sq ft are too large for the general printing business. (The cigarette box printing business was shifted to Vietnam in the first half of 2015.) As at end-2014, the book value of the freehold land is RM 27m, and that of the factory RM 13m. What is the redevelopment potential of the land?
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