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31-07-2013, 11:50 AM
Here are some key takeaways from the AGM:
1. Is there a delay in the IPO of KTIS?: This was evidently topmost on the minds of shareholders.
Management said with effect from July 3, the SEC (Securities and Exchange Commission) of Thailand had allowed KTIS to start marketing its shares.
The SEC is in the midst of evaluating the IPO application.
Within 45 days of July 3 (ie, before August 18), the SEC is expected to grant approval for the listing. Upon receiving the approval, KTIS has up to 6 months to list its shares. This can be extended by another 6 months.
To fix its IPO price, KTIS will do book-building first. (For background on King Wan's link with KTIS, read: OSK-DMG initiates coverage of King Wan with 40-c target)
2. Divesting KTIS: King Wan will not sell all its KTIS shares at one go as "we believe this company has long-term growth potential," said Ms Chua. She elaborated on the various business segments of KTIS.
King Wan holds S$48 million worth of KTIS shares, which could translate into a 2-3% stake in the listco.
KTIS reported about US$100 million in net profit last year, and is slated to be the No.1 largest listed sugar company in Thailand.
3. Special dividends: To a question, management said that for the second year, it will be paying 1.5 cents a share as ordinary dividend.
The disposal of KTIS shares would place the company in a position to reward shareholders further.
Asked to comment on analyst reports by SIAS Research and OSK-DMG about King Wan being able to pay special dividends for several years, management said the analysts had studied King Wan's cashflows and track record of rewarding shareholders with special dividends.
"We don't think their assumptions are wrong."
OSK-DMG analyst Lee Yue Jer has noted in a report that the M&E business currently contributes S$5m-7m of cash, which easily pays for the 1.5 cent ordinary dividend totaling S$5.2m.
The analyst said if King Wan wanted to, it could sell the KTIS shares gradually and be able to pay 1.5 cent a share as special dividend annually over 10 years -- assuming the sale price is S$48 million in aggregate.
"This doubles the dividend to a juicy 9.7% yield sustainable for the next 10 years," according to the analyst.
4. Business direction: Management said King Wan will stay focused on its core business of mechanical & electrical engineering.
It had taken a 30% stake in a 58,000 dwt Supramax bulk carrier costing U$21m ship in January 2013 purely for investment. Sold by a shipyard after the original buyer couldn't complete the purchase, the ship had come "pretty cheap" to King Wan and has been chartered out from March 2013 to a reputable charterer at US$9,500 a day for three years.
With the charter rate locked in for that period, King Wan is assured of positive cashflow and is looking forward to a capital gain in the years ahead when ship prices go up with an upcycle in the shipping sector.
If another ship comes at an attractive price, King Wan would consider investing in it.
Source: NextInsight
1. Is there a delay in the IPO of KTIS?: This was evidently topmost on the minds of shareholders.
Management said with effect from July 3, the SEC (Securities and Exchange Commission) of Thailand had allowed KTIS to start marketing its shares.
The SEC is in the midst of evaluating the IPO application.
Within 45 days of July 3 (ie, before August 18), the SEC is expected to grant approval for the listing. Upon receiving the approval, KTIS has up to 6 months to list its shares. This can be extended by another 6 months.
To fix its IPO price, KTIS will do book-building first. (For background on King Wan's link with KTIS, read: OSK-DMG initiates coverage of King Wan with 40-c target)
2. Divesting KTIS: King Wan will not sell all its KTIS shares at one go as "we believe this company has long-term growth potential," said Ms Chua. She elaborated on the various business segments of KTIS.
King Wan holds S$48 million worth of KTIS shares, which could translate into a 2-3% stake in the listco.
KTIS reported about US$100 million in net profit last year, and is slated to be the No.1 largest listed sugar company in Thailand.
3. Special dividends: To a question, management said that for the second year, it will be paying 1.5 cents a share as ordinary dividend.
The disposal of KTIS shares would place the company in a position to reward shareholders further.
Asked to comment on analyst reports by SIAS Research and OSK-DMG about King Wan being able to pay special dividends for several years, management said the analysts had studied King Wan's cashflows and track record of rewarding shareholders with special dividends.
"We don't think their assumptions are wrong."
OSK-DMG analyst Lee Yue Jer has noted in a report that the M&E business currently contributes S$5m-7m of cash, which easily pays for the 1.5 cent ordinary dividend totaling S$5.2m.
The analyst said if King Wan wanted to, it could sell the KTIS shares gradually and be able to pay 1.5 cent a share as special dividend annually over 10 years -- assuming the sale price is S$48 million in aggregate.
"This doubles the dividend to a juicy 9.7% yield sustainable for the next 10 years," according to the analyst.
4. Business direction: Management said King Wan will stay focused on its core business of mechanical & electrical engineering.
It had taken a 30% stake in a 58,000 dwt Supramax bulk carrier costing U$21m ship in January 2013 purely for investment. Sold by a shipyard after the original buyer couldn't complete the purchase, the ship had come "pretty cheap" to King Wan and has been chartered out from March 2013 to a reputable charterer at US$9,500 a day for three years.
With the charter rate locked in for that period, King Wan is assured of positive cashflow and is looking forward to a capital gain in the years ahead when ship prices go up with an upcycle in the shipping sector.
If another ship comes at an attractive price, King Wan would consider investing in it.
Source: NextInsight
). From a longer term investing point of view (since King Wan is not going to sell all its KTIS shares at one go), it might be a good time for King Wan to receive KTIS Shares now (at lower IPO price) when sugar prices is at near bottom but sugar future prices are on the uptrend (although it might not be a good time for KTIS to IPO it's shares).