Pteris Global

(21-04-2014, 04:58 PM)gutman Wrote:

(21-04-2014, 10:58 AM)CityFarmer Wrote: This company is a good example of a "nobody's child" company. I recalled Mr. Yeo from Yeoman Capital Management, commented on "nobody's child" companies vs. family-owned companies.

The top 3 shareholders of the company are directly holding 15%, 10% and 6% of the company respectively, the rest are minority shareholders. It is true that minority shareholders are in fact, the majority.

Nobody care the company performance over the period 2008-2013, when company was having heavy losses.

(not vested)

Before 2008, it was somebody's child. The late founder used to own more than 30% of the company. The company was doing well until he sold out in 2007. That was also the last time any dividend was distributed.

Thanks for the update.

It seems the business model may be profitable, but mis-managed. Time to revisit the company fundamentals , after the RTO?

(21-04-2014, 05:22 PM)CityFarmer Wrote:

(21-04-2014, 04:58 PM)gutman Wrote:

(21-04-2014, 10:58 AM)CityFarmer Wrote: This company is a good example of a "nobody's child" company. I recalled Mr. Yeo from Yeoman Capital Management, commented on "nobody's child" companies vs. family-owned companies.

The top 3 shareholders of the company are directly holding 15%, 10% and 6% of the company respectively, the rest are minority shareholders. It is true that minority shareholders are in fact, the majority.

Nobody care the company performance over the period 2008-2013, when company was having heavy losses.

(not vested)

Before 2008, it was somebody's child. The late founder used to own more than 30% of the company. The company was doing well until he sold out in 2007. That was also the last time any dividend was distributed.

Thanks for the update.

It seems the business model may be profitable, but mis-managed. Time to revisit the company fundamentals , after the RTO?

After the RTO, assuming it goes though, this local company would become an S-Chip, with the Chinese company holding 75% shares. I am not so sure if they will continue to keep their operations here in Singapore.

From the advertisement posted on the papers, it seems the director fighting for the removal of other directors was for a move back to the 2007 business model and a rehire of ex-staff who left in droves during the change over period in 2008-2009. It seems feasible, but depends on how the EGM turns out this Friday.

(21-04-2014, 06:11 PM)gutman Wrote: After the RTO, assuming it goes though, this local company would become an S-Chip, with the Chinese company holding 75% shares. I am not so sure if they will continue to keep their operations here in Singapore.

From the advertisement posted on the papers, it seems the director fighting for the removal of other directors was for a move back to the 2007 business model and a rehire of ex-staff who left in droves during the change over period in 2008-2009. It seems feasible, but depends on how the EGM turns out this Friday.

IMO, assuming the RTO go thru, even after the board members are replaced. The new board members will likely be replaced by the new major shareholder, who hold 75% of company shares.

The only benefit brought-in by the new board members, is when RTO failed, and they might save the company. BTW, survivability without the RTO is highly unlikely, IMO.

(not vested)

PUBLISHED APRIL 22, 2014
Pteris owners urged not to jeopardise RTO deal

BYJAIRA KOH
jairakoh@sph.com.sg
PRINT |EMAIL THIS ARTICLE

THE contentious proposed reverse takeover (RTO) offers Pteris Global synergy with - and the size of - its target's parent company, so shareholders should not jeopardise the deal with their votes before all the details are available, said Pteris's board of directors.
They were speaking at a shareholders' dialogue yesterday to address dissenting Pteris director Winston Tan's requisition to remove five directors from the board over Pteris's poor performance since 2007 and RTO terms that he feels do not favour shareholders.
At Pteris's extraordinary general meeting this Friday, votes from shareholders of the airport logistics systems provider will decide the fate of not only the five directors but also possibly the RTO.
China International Marine Containers Group (CIMC), parent company of RTO target Tianda Airport Support, said last Friday that the removal of the five directors would be taken as a "lack of support from shareholders for the proposed RTO" and that it would "take the necessary steps to protect its interests".
The deal offers more than the $90 million club loan contingent on it and propping up existing operations, said the board.
"We have synergy (with CIMC) in the sense of global marketing, and we definitely have synergy in terms of procurement, supply-chain management, even engineering design (and) manufacturing," said Pteris independent director Robert Chew. "We can even adopt what larger companies do by organising around . . . shared services on a global basis."
Both firms are similar in that they provide logistics solutions for major transport hubs, said Mr Chew - CIMC for the shipping industry and Pteris for the aviation industry.
Pteris will also benefit from CIMC's significant clout, said Mr Chew, pointing to the firm's $8.9 billion revenue in 2012 and 63,000 employees.
He said CIMC's size offers Pteris not just a large home market, the government-to-government business opportunities it deals in and substantial financial resources, but also leverage that may be essential in Pteris's industry.
For example, one "troublesome" firm Pteris subcontracts for has begun to treat Pteris with more "respect" during claims negotiations since CIMC began backing Pteris, revealed Mr Chew.
He also believes CIMC's partnership will help Pteris find new markets, and highlighted how CIMC's backing had helped Pteris secure a US project.
After Mr Chew had presented the RTO and CIMC to shareholders, chairman Lim Joo Boon challenged Mr Tan by saying: "If you have a better offer, put it on the table."

For those who are interested, here's a bit of history of this company,

Founding History - Spring 春
The company, known as Inter-Roller Engineering, was founded by the late Yap Lem and another director, and started with 8 staff in 1979.

Inter-Roller began by supplying conveyors to factories in Singapore and other regional countries. It started growing and by 1990s, has a staff strength of approximately 200 workers. The company was doing sales revenue of about 30 mil or less.

Growth Phase - Summer 夏
The company's breakthrough came in approximately 1995-1998 when they started focusing in logistics business, in particular, airport logistics business. With a track record in supplying systems to Changi Airport and SATs, they went regional and eventually established themselves as an airport logistics player in Asia. By 2000, their track record included projects in China, India and most Asean countries.

Reaching a Peak - Hottest days in Summer 盛夏
By 2005-2006, they even make their footprints felt in Europe, North America, Latin America, Carribbean Islands and Africa. In 2007, their revenue were hitting approximately 130 mil, and staff strength has gown to more than 700 with factories in Singapore, Malaysia and China. The company became a well known name internationally in the airport logistics sector. Naturally, the stock price rocketed and went up more than 10 folds. Many, who rode with the company's growth, were well rewarded.

It was one great success story of a Singapore homegrown company.

Start of Decline - Autumn 秋
However, it seems all good things must come to an end.

There was a change in management in 2007-2008, when the founder sold all his shares and stepped down due to health. He eventually passed away a few months after that. For some reasons, many old guards and key executives of the company left. The company, after changing its name from Inter-Roller to Pteris in 2008, started its path of decline.

In 2007, the company had a shareholder equity of 70 mil, built and accumulated over many years. By 2013, shareholder equity was left with 35 mil, almost 50% wiped out from 2008 to 2013. From 2008, the company barely made any profits of more than 1%, apart from the huge losses suffered in the last 2 years.

Today - Winter 冬
As it stands today, the company is at the edge of becoming an S-chip from a reverse takeover.

Key Takeaways
There are many lessons we can learn from the boom and bust of this company. One key takeaway is on succession planning, which most small to mid cap companies fail to pay serious attention until it is too late.

Secondly, a company is only as good as its management. It is the management that produces the numbers. So while we all try hard to look at the quarterly financial numbers to try and "decipher" the company from a value investor point of view, efforts must be spent to try and know the people running the company.

Thirdly, every business has its cycle - (the four seasons - 春夏秋冬). Being able to identify one and knowing when to ride one is certainly helpful to our investment.

(22-04-2014, 01:26 PM)gutman Wrote: For those who are interested, here's a bit of history of this company,

Founding History - Spring 春
The company, known as Inter-Roller Engineering, was founded by the late Yap Lem and another director, and started with 8 staff in 1979.

Inter-Roller began by supplying conveyors to factories in Singapore and other regional countries. It started growing and by 1990s, has a staff strength of approximately 200 workers. The company was doing sales revenue of about 30 mil or less.

Growth Phase - Summer 夏
The company's breakthrough came in approximately 1995-1998 when they started focusing in logistics business, in particular, airport logistics business. With a track record in supplying systems to Changi Airport and SATs, they went regional and eventually established themselves as an airport logistics player in Asia. By 2000, their track record included projects in China, India and most Asean countries.

Reaching a Peak - Hottest days in Summer 盛夏
By 2005-2006, they even make their footprints felt in Europe, North America, Latin America, Carribbean Islands and Africa. In 2007, their revenue were hitting approximately 130 mil, and staff strength has gown to more than 700 with factories in Malaysia and China. The company became a well known name internationally in the airport logistics sector. Naturally, the stock price rocketed and went up more than 10 folds. Many, who rides with the company's growth, were well rewarded.

It was one great success story of a Singapore homegrown company.

Start of Decline - Autumn 秋
However, it seems all good things must come to an end.

There was a change in management in 2007-2008, when the founder sold all his shares and stepped down due to health. He eventually passed away a few months after that. For some reasons, many old guards and key executives of the company left. The company, after changing its name from Inter-Roller to Pteris in 2008, started its path of decline.

In 2007, the company had a shareholder equity of 70 mil, built and accumulated over many years. By 2013, shareholder equity was left with 35 mil, almost 50% wiped out from 2008 to 2013. From 2008, the company barely made any profits of more than 1%, apart from the huge losses suffered in the last 2 years.

Today - Winter 冬
As it stands today, the company is at the edge of becoming an S-chip from a reverse takeover.

Key Takeaways
There are many lessons we can learn from the boom and bust of this company. One key takeaway is on succession planning, which most small to mid cap companies fail to pay serious attention until it is too late.

Secondly, a company is only as good as its management. It is the management that produces the numbers. So while we all try hard to look at the quarterly financial numbers to try and "decipher" the company from a value investor point of view, efforts must be spent to try and know the people running the company.

Thirdly, every business has its cycle - (the four seasons - 春夏秋冬). Being able to identify one and knowing when to ride one is certainly helpful to our investment.

Thanks Gutman. It is certainly interesting reading the company's history.

Do you know if it is because the new mgmt changed the business (or tried to) or simply the new mgmt cocks up when they took over the business or simply bad luck because they kanna affected by the GFC?

Great post Gutman I was about to comment that Inter Roller was one of the hot growth stock when the chinese airlines and low cost carrier theme was booming

It is always intriguing to me when people say management or politics doesn't matter. 不是不到，只是时辰未到. It will take more than a decade for Apple to decline due to her buffer, but that does not mean management is irrelevant. See Microsoft under "Bummer".

Newsflows, decisions, activities are all done by the people, not some invisible hand or accounting balance sheet

(22-04-2014, 03:17 PM)GPD Wrote:

(22-04-2014, 01:26 PM)gutman Wrote: For those who are interested, here's a bit of history of this company,

Founding History - Spring 春
The company, known as Inter-Roller Engineering, was founded by the late Yap Lem and another director, and started with 8 staff in 1979.

Inter-Roller began by supplying conveyors to factories in Singapore and other regional countries. It started growing and by 1990s, has a staff strength of approximately 200 workers. The company was doing sales revenue of about 30 mil or less.

Growth Phase - Summer 夏
The company's breakthrough came in approximately 1995-1998 when they started focusing in logistics business, in particular, airport logistics business. With a track record in supplying systems to Changi Airport and SATs, they went regional and eventually established themselves as an airport logistics player in Asia. By 2000, their track record included projects in China, India and most Asean countries.

Reaching a Peak - Hottest days in Summer 盛夏
By 2005-2006, they even make their footprints felt in Europe, North America, Latin America, Carribbean Islands and Africa. In 2007, their revenue were hitting approximately 130 mil, and staff strength has gown to more than 700 with factories in Malaysia and China. The company became a well known name internationally in the airport logistics sector. Naturally, the stock price rocketed and went up more than 10 folds. Many, who rides with the company's growth, were well rewarded.

It was one great success story of a Singapore homegrown company.

Start of Decline - Autumn 秋
However, it seems all good things must come to an end.

There was a change in management in 2007-2008, when the founder sold all his shares and stepped down due to health. He eventually passed away a few months after that. For some reasons, many old guards and key executives of the company left. The company, after changing its name from Inter-Roller to Pteris in 2008, started its path of decline.

In 2007, the company had a shareholder equity of 70 mil, built and accumulated over many years. By 2013, shareholder equity was left with 35 mil, almost 50% wiped out from 2008 to 2013. From 2008, the company barely made any profits of more than 1%, apart from the huge losses suffered in the last 2 years.

Today - Winter 冬
As it stands today, the company is at the edge of becoming an S-chip from a reverse takeover.

Key Takeaways
There are many lessons we can learn from the boom and bust of this company. One key takeaway is on succession planning, which most small to mid cap companies fail to pay serious attention until it is too late.

Secondly, a company is only as good as its management. It is the management that produces the numbers. So while we all try hard to look at the quarterly financial numbers to try and "decipher" the company from a value investor point of view, efforts must be spent to try and know the people running the company.

Thirdly, every business has its cycle - (the four seasons - 春夏秋冬). Being able to identify one and knowing when to ride one is certainly helpful to our investment.

Thanks Gutman. It is certainly interesting reading the company's history.

Do you know if it is because the new mgmt changed the business (or tried to) or simply the new mgmt cocks up when they took over the business or simply bad luck because they kanna affected by the GFC?

I believe it was a problem with execution.

There was no lack of contracts as seen in the sales revenue of 80+ mil to 132 mil from 2009 to 2011 which. In 2011, with a record revenue of 132 mil, it turns in a pathetic profit of 0.3% and ROE of 0.5%, compared to in 2007, revenue was 124 mil, profit margin 12% and ROE of 20%.

The hammer came hard in 2012 and 2013 when cost of materials, subcontract and others came up to 94% and 99% of revenue respectively. The losses in both years were 29 mil each, measuring loss margin of 45% and 59% respectively.

NAV came falling down from 21 cts in 2007 to 6 cts currently.

(22-04-2014, 04:06 PM)gutman Wrote: I believe it was a problem with execution.

There was no lack of contracts as seen in the sales revenue of 80+ mil to 132 mil from 2009 to 2011 which. In 2011, with a record revenue of 132 mil, it turns in a pathetic profit of 0.3% and ROE of 0.5%, compared to in 2007, revenue was 124 mil, profit margin 12% and ROE of 20%.

The hammer came hard in 2012 and 2013 when cost of materials, subcontract and others came up to 94% and 99% of revenue respectively. The losses in both years were 29 mil each, measuring loss margin of 45% and 59% respectively.

NAV came falling down from 21 cts in 2007 to 6 cts currently.

Agreed. I am also more inclined to believe that it was a problem of execution.

Base on the Chairman's comment on project delays and cost overruns (from recent The Edge article), the company had lost control on the issues, "fighting fires" all the time, and blaming "A lot of the writeoffs that hit our books in recent years are a result of a lot of work that we contracted back in 2006 and 2007" (meaning not his fault, because he onboard in 2011)

What a comment from the Chairman of a company...

(not vested)

(22-04-2014, 04:05 PM)specuvestor Wrote: Great post Gutman I was about to comment that Inter Roller was one of the hot growth stock when the chinese airlines and low cost carrier theme was booming

It is always intriguing to me when people say management or politics doesn't matter. 不是不到，只是时辰未到. It will take more than a decade for Apple to decline due to her buffer, but that does not mean management is irrelevant. See Microsoft under "Bummer".

Newsflows, decisions, activities are all done by the people, not some invisible hand or accounting balance sheet

Thanks specuvestor.

Inter-Roller was indeed riding high on the airport construction boom during that period. Chinese cities, middle east countries and many others were all competing to build large airports.

It was a stock market darling then. In 2006-2007, many analysts started to cover the company. Institutional and retail investors started rushing in and the stock was pushed to a high of 5-6 times book value . I noticed the founder started selling out, and fortunately I followed.

It took the old management 28 years to build up a shareholder equity of 70 mil. It only took the new management 6 years to bring it down by half. So, yes, management does matter.