Khong Guan

Problem is anyone buying in this slow market? They should have divested a year or so ago when things were more hot

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(27-07-2016, 05:48 PM)BlueKelah Wrote: Problem is anyone buying in this slow market? They should have divested a year or so ago when things were more hot

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I just did a map searching and found something interesting.

http://infopub.sgx.com/FileOpen/KGFM31Ju...eID=422811

Yet another lackluster result from Khong Guan. EPS 0.22 cts, div maintained at 3 cts.

No mention about the proposed property sale.

http://infopub.sgx.com/FileOpen/Acquisit...eID=425155

http://infopub.sgx.com/FileOpen/PressRel...eID=425156

Lian Beng acquires 8-storey freehold Khong Guan Industrial Building at 20 Mactaggart Rd for S$31 million



Based on 25,813,000 outstanding shares, EPS is 1.20/share. Current NAV is 2.43 and it will be 3.63 when the sale completed. Zero debt with minimum capex, is a special div on the way? 
Share price has risen from 1.9+ to 2.32 (last closing), let's see....

(25-10-2016, 01:04 AM)desmondxyz Wrote: http://infopub.sgx.com/FileOpen/Acquisit...eID=425155

http://infopub.sgx.com/FileOpen/PressRel...eID=425156

Lian Beng acquires 8-storey freehold Khong Guan Industrial Building at 20 Mactaggart Rd for S$31 million



Based on 25,813,000 outstanding shares, EPS is 1.20/share. Current NAV is 2.43 and it will be 3.63 when the sale completed. Zero debt with minimum capex, is a special div on the way? 
Share price has risen from 1.9+ to 2.32 (last closing), let's see....

SGX-listed unit is Khong Guan Flour Milling Limited ("KGFM")
dun think listed KGFM has any interests in No 20 Mactaggart Rd  (Khong Guan Industrial Building).

But Listed KGFM own the immediate neighbour - No 2 Mactaggart Rd (Khong Guan Biscuit Factory), which is a 50-yrs old, 3-storey building,
it is currently being redevelop into a 8-storey building to fully utilised its 2.5x plot ratio.
from existing 3-storey 1125 sqM GFA =} to a new 8-storey building with approx 2550 sqM GFA

The company changed its name to Khong Guan Limited with effect from 25 November 2016.

The change of the company's trading counter name on the Mainboard of the SGX-ST will take effect at 9.00 am on Wednesday, 30 November 2016 and the new trading counter name will be "Khong Guan".

Khong Guan has released its FY17 results:

http://infopub.sgx.com/FileOpen/KGL31Jul...eID=472309

1) In recent years, the performance of the trading operations -- Tong Guan Food Products Sdn Bhd and Swee Hin Chan Co Sdn Bhd -- has gone from slightly profitable to loss. Khong Guan has been surviving on the prosperity of its 30% associate United Malayan Flour.

Net profit from UMF vs Group net profit:

FY2011: $2.6m vs $4.5m
FY2012: $1.8m vs $2.3m
FY2013: $1.4m vs $2m
FY2014: $1.2m vs $1.3m
FY2015: $1.5m vs $1.2m
FY2016: $1.6m vs $0.06m
FY2017: $1.8m vs $1.2m

Interested Persons Transactions shows Khong Guan spending $11.6m to buy inventories from UMF. UMF's FY16 revenue is $94m. So it is not a case where UMF's profitability is largely dependent on Khong Guan; only about 12% to be precise.

2) Perhaps in trying to move away from the low returns of its old economy business, Khong Guan decided to make fast money from trading securities. But unfortunately, its results show it is no Berkshire Hathaway. Over a 7 year period, operating losses totaled $3.05m. Amount held in short-term investments on the B/S shrank from $10.4m in 2011 to $5.8m in 2017.

Operating profit from investment trading:

FY11: $0.23m
FY12: -$1.09m
FY13: $0.23m
FY14: -$0.44m
FY15: -$1.26m
FY16: -$1.06m
FY17: $0.34m

3) Its 2 MacTaggart Road heritage building, which is being redeveloped into a 7 storey industrial building, will take perhaps a few more months before it is completed and ready to be leased. It was valued in 2014 at $12.5m. Since it is a heritage building, for it to be sold to a third party could be unlikely, since there will be restrictions to redevelopment.

The market says Khong Guan is worth some $51m. I think better bang for your buck could be found elsewhere.

Did not read up too much on Khong Guan but I probably can identify with the issues associated with its food manufacturing and trading arm.

First and foremost credit must be given to them for being able to stay in business for so long.
And that's where the issues start, it's difficult for a old economy company to change its ways.
Little product innovation. Also many of these well known Singapore Brands has supply chain and distribution channels that are completely out of date and inefficient.

i.e. Sales man still goes to a number of shops to find out what is out of stock, what needs to be replenished etc etc
Then it relates the order to a processing clerk who then follows it up with the storeman and delivery driver.

While your grandpa and grandma have khong guan biscuits/Pau as a staple food, back then there are fewer choices, the new generation has a bigger variety of food/other products to choose from(I dont smoke but a friend working for a famous cigarette brand said one brand of cigarettes has now 26 flavors....26????? and I thought it is just 2-3 per brand) . The big foreign brands are always innovating and providing fresh new options.

Indeed, I have not seen new products from Khong Guan since...saw tar piah!

It is a shame for what was once a market leader to have become the market laggard. They say that trees don't grow to the sky, and I suppose Khong Guan has had their most prosperous years (or decades) behind them.

http://www.khongguanlimited.com

Purchased the property at 2 Mactaggart Road office building in 2003.

TOP submission has been made for the heritage industrial building and its approval is expected soon.