Homepage
PR Newswire
This is an interesting company with 60years of operating history. Emeritus Chairman Lim (48% ownership) is 95years old and back in the AGM in July2021, he had openly deemed that none of his family members were ready to succeed him.
This was followed by his son (executive director) and grandson (Plant manager) openly revolting against him through a police report and whistle blowing on some "inappropriate prepayments".
Business
Chemical Industries is in the business of production, sales and distribution of chlorine/ akali chemicals (sodium hydroxide, chlorine, hydrochloric acid). Revenue has gone nowhere for a decade - While it is the sole local mfg of such chemicals, foreign imports have proven to be tough competition and their products have probably no differentiation and pricing power. This portion of the business has incurred a net loss in the last FY due to higher electricity costs, and is expected to continue to do the same in the current FY with the locked in 2 year electricity contract it signed with the genco.
Besides costs, Lady Luck has not been shining on Chemical Industries as it started Myanmar operations in early 2020, only to be hit by the military coup 1 year later. It had invested ~11mil in the PPE. While it is still operating now and cash flow positive, Mgt has taken the approach to write down the PPE fully.
Asset
The best part of this company is probably its 2 shophouses opposite Clarke Quay (17 Upper Circular Rd and 19 Carpenter Street). Quick check on URA website suggests transaction activity over there are generally limited, with only 1 transaction (6mil) done in Dec2019 (13 Upper Circular Rd). The same property has undergone some AEI and is currently peddling for 24.2mil.
https://www.edgeprop.sg/property-news/sh...le-242-mil
The ground floor of its 17 Upper Circular Rd shophouse is rented out to a sauna operation. And quick check on google reviews show up stuff like "A mixed crowd where you're likely to find your match. Plenty of action, especially when you're open-minded" and "If you got it flaunt it and you will get it."...Pretty unique clientele I suppose.
Structure
This is not a liquid stock. Almost 75% of its ~50mil market cap is held by insiders/institutions. Taking inspiration from Buffett, Founder Lim only stepped down as MD in 2021, at a good old age of 93years old then. After 3 sons, 1 nephew and 1 grandson who came and left, only a 4th son is left in a NED role since 2019.
BOD largely renewed itself (or got purged?) in the last 2 years. The C-suite has been renewed too --> CEO and COO - Sept2022, CFO-Oct2020, Plant Director-Aug2021, Sales Director-Dec2022. Things looked to be getting better until the COO tendered his resignation just after 1 year.
Mr Loi has tendered his resignation as Chief Operating Officer with notice, to pursue his self-interest and personal goals. His cessation as COO will take effect from 11 April 2024.
https://links.sgx.com/1.0.0/corporate-an...34e07f7871
This was followed by his son (executive director) and grandson (Plant manager) openly revolting against him through a police report and whistle blowing on some "inappropriate prepayments".
Business
Chemical Industries is in the business of production, sales and distribution of chlorine/ akali chemicals (sodium hydroxide, chlorine, hydrochloric acid). Revenue has gone nowhere for a decade - While it is the sole local mfg of such chemicals, foreign imports have proven to be tough competition and their products have probably no differentiation and pricing power. This portion of the business has incurred a net loss in the last FY due to higher electricity costs, and is expected to continue to do the same in the current FY with the locked in 2 year electricity contract it signed with the genco.
Besides costs, Lady Luck has not been shining on Chemical Industries as it started Myanmar operations in early 2020, only to be hit by the military coup 1 year later. It had invested ~11mil in the PPE. While it is still operating now and cash flow positive, Mgt has taken the approach to write down the PPE fully.
Asset
The best part of this company is probably its 2 shophouses opposite Clarke Quay (17 Upper Circular Rd and 19 Carpenter Street). Quick check on URA website suggests transaction activity over there are generally limited, with only 1 transaction (6mil) done in Dec2019 (13 Upper Circular Rd). The same property has undergone some AEI and is currently peddling for 24.2mil.
https://www.edgeprop.sg/property-news/sh...le-242-mil
The ground floor of its 17 Upper Circular Rd shophouse is rented out to a sauna operation. And quick check on google reviews show up stuff like "A mixed crowd where you're likely to find your match. Plenty of action, especially when you're open-minded" and "If you got it flaunt it and you will get it."...Pretty unique clientele I suppose.
Structure
This is not a liquid stock. Almost 75% of its ~50mil market cap is held by insiders/institutions. Taking inspiration from Buffett, Founder Lim only stepped down as MD in 2021, at a good old age of 93years old then. After 3 sons, 1 nephew and 1 grandson who came and left, only a 4th son is left in a NED role since 2019.
BOD largely renewed itself (or got purged?) in the last 2 years. The C-suite has been renewed too --> CEO and COO - Sept2022, CFO-Oct2020, Plant Director-Aug2021, Sales Director-Dec2022. Things looked to be getting better until the COO tendered his resignation just after 1 year.
Mr Loi has tendered his resignation as Chief Operating Officer with notice, to pursue his self-interest and personal goals. His cessation as COO will take effect from 11 April 2024.
https://links.sgx.com/1.0.0/corporate-an...34e07f7871
Looks like the major risk is actually the structure ie shareholding / management after the old man move on. If it is passed to a passive trust or charity, since it seems his family relationship is suboptimal, the business and management might likely be stagnant when there's no skin in the game.