New Toyo

(21-07-2014, 11:19 PM)Curiousparty Wrote: Although New Toyo/Tien Wah might have a few pieces of "under-valued" assets scattered here and there, I realized that these would take many years before their value would be realized if any. There is a possibility that their value might never be realized at all, given that there is NO PLAN in the foreseeable future to go into property redevelopment.

This view was further reinforced/confirmed thru interactions with the management during the last 2 AGMs. The key focus is to serve BAT and not property redevelopment.

The one thing I truly learnt about New Toyo is that honestly there is no way for u to track its performance using information readily available from the market. Do u know how much does one printer print each day? The revenue or cost from one printer? Do u know how to derive the COGs for Tien Wah and New Toyo?

When i decided to invest in New Toyo, my decision was never on how they are gg to develop their properties or what is the output and cost of the printers. Even if you know the output and cost, how will that help in decision-making? In order to find out where New Toyo stands, you will need all the numbers from other similar competitors at an industry level. Such stuff are not accessible to most investors.


For me, the main points of New Toyo are:
- Strong cash flow generated Qtr after Qtr, cash pile building up
- no accounting tricks, not highly leveraged
- they are in a defensive and resiliant business
- contract with BAT which will ensure recurring revenue

(22-07-2014, 01:42 PM)Curiousparty Wrote: I never have bad intentions . I qualified each statement I made. I never insulted anyone.

I am laying everyone the information from a shareholder point of view.

ianphoon Wrote:i do hope the moderators are watching his posts and will do the necessary to make the forum a better place for everyone to share information with good intentions.

The moderator is watching. No moderation needed so far

Everyone is entitled to post his/her view, as long as it is not baseless, and no violation of posting guidelines. All buddies are presumed to share info with good intention, unless otherwise proven.

Thank

Regards
Moderator

(20-07-2014, 10:06 AM)Curiousparty Wrote: Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents

fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents

Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).

The 3-for-5 rights issue, at a low price of 12 c per share in 3Q 2010, enlarged the number of New Toyo shares from 275m to 439m, and caused NAV per share to plunge from 47c to 34c.

2007 NAV of 38.90c in Curiosparty's post is based on the number of New Toyo shares before the right issue; whereas 2013 NAV of 35.64c is based on the enlarged number of shares.

Fair comparison requires both NAVs be based on a common number of shares; and such adjustment will result in a NAV of 24.3c (38.9c divided by 1.6) for 2007.

The average NAV per share between 2005 and 2007 is therefore 22.9c, 13c lower than the average of 36.2c for the recent three years.

The increase in shareholder value can be demonstrated in a more direct way.

Shareholder fund stood at $157m as at 31 Dec 2013, $ 47m higher than Dec 2008, when the exclusive BAT printing contract came into being.

Between 2009 and 2013, New Toyo paid $45.6m in dividends.

Shareholders contributed $19.5m during the rights issue in 2010.

Value enhancement therefore amounts to $ 76m (=50 + 45.6 – 19.5).

Whether the $76m enhancement represents sufficient return to individual shareholders or not is another matter altogether.

Tks Portuser.

Based on the adjusted NAV, the NAV (post-BAT) has increased about 58%.

So, from this point onwards, it is a question mark on how fast New Toyo can further grow its NAV or equity.
Let's hope BAT can renew the contract, else it would be a dead end for New Toyo/Tien Wah.

(22-07-2014, 04:32 PM)portuser Wrote:

(20-07-2014, 10:06 AM)Curiousparty Wrote: Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents

fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents

Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).

The 3-for-5 rights issue, at a low price of 12 c per share in 3Q 2010, enlarged the number of New Toyo shares from 275m to 439m, and caused NAV per share to plunge from 47c to 34c.

2007 NAV of 38.90c in Curiosparty's post is based on the number of New Toyo shares before the right issue; whereas 2013 NAV of 35.64c is based on the enlarged number of shares.

Fair comparison requires both NAVs be based on a common number of shares; and such adjustment will result in a NAV of 24.3c (38.9c divided by 1.6) for 2007.

The average NAV per share between 2005 and 2007 is therefore 22.9c, 13c lower than the average of 36.2c for the recent three years.

The increase in shareholder value can be demonstrated in a more direct way.

Shareholder fund stood at $157m as at 31 Dec 2013, $ 47m higher than Dec 2008, when the exclusive BAT printing contract came into being.

Between 2009 and 2013, New Toyo paid $45.6m in dividends.

Shareholders contributed $19.5m during the rights issue in 2010.

Value enhancement therefore amounts to $ 76m (=50 + 45.6 – 19.5).

Whether the $76m enhancement represents sufficient return to individual shareholders or not is another matter altogether.

On your point on cash pile up, I would like to point out that the current cash pile seemed to actually come from the divestment of SAH (~ $58mil). If we removed this cash from SAH, New Toyo group net cash position would have been worsened by $58mil. Am I right?

Can someone show whether New Toyo (not Tien Wah) has broken even on its investment in the BAT contract (excluding cash from divestment of SAH).

tks.

(22-07-2014, 02:39 PM)level13 Wrote:

(21-07-2014, 11:19 PM)Curiousparty Wrote: Although New Toyo/Tien Wah might have a few pieces of "under-valued" assets scattered here and there, I realized that these would take many years before their value would be realized if any. There is a possibility that their value might never be realized at all, given that there is NO PLAN in the foreseeable future to go into property redevelopment.

This view was further reinforced/confirmed thru interactions with the management during the last 2 AGMs. The key focus is to serve BAT and not property redevelopment.

The one thing I truly learnt about New Toyo is that honestly there is no way for u to track its performance using information readily available from the market. Do u know how much does one printer print each day? The revenue or cost from one printer? Do u know how to derive the COGs for Tien Wah and New Toyo?

When i decided to invest in New Toyo, my decision was never on how they are gg to develop their properties or what is the output and cost of the printers. Even if you know the output and cost, how will that help in decision-making? In order to find out where New Toyo stands, you will need all the numbers from other similar competitors at an industry level. Such stuff are not accessible to most investors.


For me, the main points of New Toyo are:
- Strong cash flow generated Qtr after Qtr, cash pile building up
- no accounting tricks, not highly leveraged
- they are in a defensive and resiliant business
- contract with BAT which will ensure recurring revenue

Hi Portuser, how do u account for the loss in shareholder value due to the tissue paper business (2000-2002)?

I think the loss in net profit was in the region of $50mil.
how do we account for this in analyzing the shareholder value creation by New Toyo as a company?

Does this lead to the destruction of $50mil from shareholder's equity?

(22-07-2014, 04:32 PM)portuser Wrote:

(20-07-2014, 10:06 AM)Curiousparty Wrote: Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents

fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents

Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).

The 3-for-5 rights issue, at a low price of 12 c per share in 3Q 2010, enlarged the number of New Toyo shares from 275m to 439m, and caused NAV per share to plunge from 47c to 34c.

2007 NAV of 38.90c in Curiosparty's post is based on the number of New Toyo shares before the right issue; whereas 2013 NAV of 35.64c is based on the enlarged number of shares.

Fair comparison requires both NAVs be based on a common number of shares; and such adjustment will result in a NAV of 24.3c (38.9c divided by 1.6) for 2007.

The average NAV per share between 2005 and 2007 is therefore 22.9c, 13c lower than the average of 36.2c for the recent three years.

The increase in shareholder value can be demonstrated in a more direct way.

Shareholder fund stood at $157m as at 31 Dec 2013, $ 47m higher than Dec 2008, when the exclusive BAT printing contract came into being.

Between 2009 and 2013, New Toyo paid $45.6m in dividends.

Shareholders contributed $19.5m during the rights issue in 2010.

Value enhancement therefore amounts to $ 76m (=50 + 45.6 – 19.5).

Whether the $76m enhancement represents sufficient return to individual shareholders or not is another matter altogether.

(23-07-2014, 09:03 AM)Curiousparty Wrote: Hi Portuser, how do u account for the loss in shareholder value due to the tissue paper business (2000-2002)?

I think the loss in net profit was in the region of $50mil.
how do we account for this in analyzing the shareholder value creation by New Toyo as a company?

Does this lead to the destruction of $50mil from shareholder's equity?

Quriousparty

You have asked whether the failed tissue paper venture resulted in a destruction of $50mil in shareholder's equity.

I am not sure of the figure. But I am certain that you have the answer to your own question --- it is plainly obvious that the loss led to a corresponding reduction in shareholder's equity.

If you hold the view that New Toyo should not be forgiven for failing in the tissue paper venture 12 years ago, you should take New Toyo off your radar screen.

http://www.valuebuddies.com/thread-638-page-121.html

Sorry, I am Curiousparty (not "Quriousparty")

Yes, confirmed that the loss from tissue business was in the region of $50mil loss.

No one is infallible in this world and everyone does make mistake and one should be forgiving. But that does not mean "forgetting".

Plus, are the Yen family still operating the tissue paper business which they had taken private and seemingly (cld someone confirm) became very profitable after that? How do they divide their time between "printing business" and their own "tissue paper business" (if this business is still continuing to this present day)?

[caveat emptor for the tissue paper business, pending further confirmation]

(23-07-2014, 11:10 AM)portuser Wrote:

(23-07-2014, 09:03 AM)Curiousparty Wrote: Hi Portuser, how do u account for the loss in shareholder value due to the tissue paper business (2000-2002)?

I think the loss in net profit was in the region of $50mil.
how do we account for this in analyzing the shareholder value creation by New Toyo as a company?

Does this lead to the destruction of $50mil from shareholder's equity?

Quriousparty

You have asked whether the failed tissue paper venture resulted in a destruction of $50mil in shareholder's equity.

I am not sure of the figure. But I am certain that you have the answer to your own question --- it is plainly obvious that the loss led to a corresponding reduction in shareholder's equity.

If you hold the view that New Toyo should not be forgiven for failing in the tissue paper venture 12 years ago, you should take New Toyo off your radar screen.

How do u justify holding onto New Toyo when the printing profit had been deteriorating since Q3 last year?

In fact, Q1-2014 was even worse off compared to the Q1 2 years ago when they had included some one-off admin cost. Compared to Q1 last year, it was off by so much.

this does not seem to justify the claim that the business is resilient? Am I right?

Tobacco manufacturing is resilient because they can pass on drop in volume in the form of price hike to consumer, so overall the revenue (higher price x lower volume ) is still higher than before because the elasticity of demand is inelastic.

But this cannot be said for the printing industries supporting the Tobacco makers
Any drop in printing volume will hit them straight in the revenue and profit margin since economies of scale is totally lost, and unit cost will be jacked up. If this plain packaging fire were to continue spreading, I'm sure the printing volume would decline further. The entire dynamic might be changed.

This decline in printing revenue had been explained by Tien Wah in its FY13 Annual Report and this trend seems set to continue in an environment where regulatory risks are skewed against printers like Tien Wah/New Toyo.

(22-07-2014, 02:39 PM)level13 Wrote:

(21-07-2014, 11:19 PM)Curiousparty Wrote: Although New Toyo/Tien Wah might have a few pieces of "under-valued" assets scattered here and there, I realized that these would take many years before their value would be realized if any. There is a possibility that their value might never be realized at all, given that there is NO PLAN in the foreseeable future to go into property redevelopment.

This view was further reinforced/confirmed thru interactions with the management during the last 2 AGMs. The key focus is to serve BAT and not property redevelopment.

The one thing I truly learnt about New Toyo is that honestly there is no way for u to track its performance using information readily available from the market. Do u know how much does one printer print each day? The revenue or cost from one printer? Do u know how to derive the COGs for Tien Wah and New Toyo?

When i decided to invest in New Toyo, my decision was never on how they are gg to develop their properties or what is the output and cost of the printers. Even if you know the output and cost, how will that help in decision-making? In order to find out where New Toyo stands, you will need all the numbers from other similar competitors at an industry level. Such stuff are not accessible to most investors.


For me, the main points of New Toyo are:
- Strong cash flow generated Qtr after Qtr, cash pile building up
- no accounting tricks, not highly leveraged
- they are in a defensive and resiliant business
- contract with BAT which will ensure recurring revenue

To phrase it as 'justify holding onto' seems a little too strong. For a company to be established in 1975 and undergone all the ups and downs within this period, you have to give management some faith. It is undeniably that recently, New Toyo have experienced some problems, however, it is more like an industry level problem rather than company specific.

(not vested)

(23-07-2014, 01:15 PM)Curiousparty Wrote: How do u justify holding onto New Toyo when the printing profit had been deteriorating since Q3 last year?

In fact, Q1-2014 was even worse off compared to the Q1 2 years ago when they had included some one-off admin cost. Compared to Q1 last year, it was off by so much.

this does not seem to justify the claim that the business is resilient? Am I right?

Tobacco manufacturing is resilient because they can pass on drop in volume in the form of price hike to consumer, so overall the revenue (higher price x lower volume ) is still higher than before because the elasticity of demand is inelastic.

But this cannot be said for the printing industries supporting the Tobacco makers
Any drop in printing volume will hit them straight in the revenue and profit margin since economies of scale is totally lost, and unit cost will be jacked up. If this plain packaging fire were to continue spreading, I'm sure the printing volume would decline further. The entire dynamic might be changed.

This decline in printing revenue had been explained by Tien Wah in its FY13 Annual Report and this trend seems set to continue in an environment where regulatory risks are skewed against printers like Tien Wah/New Toyo.

(22-07-2014, 02:39 PM)level13 Wrote:

(21-07-2014, 11:19 PM)Curiousparty Wrote: Although New Toyo/Tien Wah might have a few pieces of "under-valued" assets scattered here and there, I realized that these would take many years before their value would be realized if any. There is a possibility that their value might never be realized at all, given that there is NO PLAN in the foreseeable future to go into property redevelopment.

This view was further reinforced/confirmed thru interactions with the management during the last 2 AGMs. The key focus is to serve BAT and not property redevelopment.

The one thing I truly learnt about New Toyo is that honestly there is no way for u to track its performance using information readily available from the market. Do u know how much does one printer print each day? The revenue or cost from one printer? Do u know how to derive the COGs for Tien Wah and New Toyo?

When i decided to invest in New Toyo, my decision was never on how they are gg to develop their properties or what is the output and cost of the printers. Even if you know the output and cost, how will that help in decision-making? In order to find out where New Toyo stands, you will need all the numbers from other similar competitors at an industry level. Such stuff are not accessible to most investors.


For me, the main points of New Toyo are:
- Strong cash flow generated Qtr after Qtr, cash pile building up
- no accounting tricks, not highly leveraged
- they are in a defensive and resiliant business
- contract with BAT which will ensure recurring revenue