Tsit Wing International

[dydx]

FY12 (ended 31Dec12) AR makes interesting reading.....
http://www.twcoffee.com/sites/default/fi...-%2018.pdf [Chairman's statement]
http://www.twcoffee.com/sites/default/fi...%20end.pdf [financial statements]

The recently revamped (in conjunction with TW's business turning 80 years old in 2012) corporate website is even more interesting.....
http://www.twcoffee.com/en/home
including the latest corporate video.

I think it is relevant to note that in 2H-FY12, TW experienced a very healthy 9.8% YoY increase and a 11.8% HoH (i.e. 2H-FY12 vs. 1H-FY12) increase in Revenue, to HKD317.651m (approx. $50.8m); as well as a very strong 343.7% YoY increase and an even stronger 516.2% HoH increase in NP, to HKD19.381m (approx. $3.1m).....
http://www.twcoffee.com/sites/default/fi...FY2012.pdf
If this positive trend continues, reasonably we are looking at TW's Revenue hitting HKD700.0m in FY13, and a much higher NP of HKD50.0m (approx. $8.0m) in FY13 looks like a fair possibility.

[brattzz]

ok roger!

Complied Questions,
1) Twice yearly Dividends become single dividend payout?
2) Dual Listing Conclusion?
3) Completion & realistion of Douguan roasting facilities
4) To post minutes of meetings @ SGX.

[ngcheeki]

ok roger!

Complied Questions,
1) Twice yearly Dividends become single dividend payout?
2) Dual Listing Conclusion?
3) Completion & realistion of Douguan roasting facilities
4) To post minutes of meetings @ SGX.

Hi Brattzz, did you manage to attend the AGM and posted the above questions? many thanks

[brattzz]

yes sir! today was a very happening day at the AGM!!

[ngcheeki]

yes sir! today was a very happening day at the AGM!!

Can share with us some of the happening? Especially, those questions you had? 10Q

[brattzz]

Chairman Wong was asked by a feisty auntie, why no dividends? his reply:

1) Cash is HK$94milos, 1/3 already spent buying the frozen food co. HK$33milo.
2) Remaining 2/3 cash all will be spent over the next 2 years. 2013 to 2015 for,
2.1) Frozen Cold Storage Facility @ the existing Intergrated Logistics Processing Centre (73 ha). - WareHousing cost control
2.2) Logistic and Distribution Hub including trucks and vans. - Distribution cost control
2.3) JV with Sri Lanka Tea Co. to start a plant to process tea leaves for expected raise in demand for tea! - Control over supply!

3) TWG has launched 2 Beverage machines, catering to B2B, and institutions.
3.1) Potpasso - Coffee
3.2) TWG - HK Style Milk Tea (1st in the world!)

4) Current Debt Gearing Ratio is 40% :- Mr Keith (Financial) intends to keep it within this range.

5) Chairman Wong stated "will use all options to raise more funds!"
- Private placement + dilution was the previous method used!

6) This model is to capture the Southern China Market, the pearl river delta region, if this is successful! the same model will be used in
shanghai!

7) Expect low/no dividends for next 2-3 years!

8) Yeoman was there too, and he made a very passionate speech to the IDs and Chairman Wong about the lack of dividends.

9) All in all, less than 20% of the shares is in the public. So no choice lah..

------------------------------------------------------------------------------
My take,
1) Company strategy is to establish a foothold and expand in china.
2) Donguan ILPC will be the stepping stone.
3) Next 2-3 years will be critical for the co.
4) If private placement is use to raise funds, more dilutions!!
5) Level of trust/mistrust between Chairman Wong's interest and minority shareholders!

Long term wise, if everything works out good! co. will expand 3-5x!
If you are long on this co. do accumulate slowly and watch the Quaterly reportings for rising revenue, profit margins, capex, FCF...

I am still long on this co. on it's biz model and plan.
But feels that Chairman Wong is tricky and stingy to minority shareholders!

---

in the heat of the "battle", forgot to ask...

1) Twice yearly Dividends become single dividend payout? - Yes, low/NO dividends...
2) Dual Listing Conclusion? - forgot to ask.
3) Completion & realistion of Douguan roasting facilities - completed and now, FULL EXPANSION PLAN STARTING!! look out for 2013 to 2015!!!
4) To post minutes of meetings @ SGX. - forgot to ask!

No worries, i will email Co. or Chairman Wong to ask them to provide,
1) Brief Biz Expansion Plan
2) MoM of AGM - (video was taken)

---

since no dividends, expect share price to trend down slowly....

[ngcheeki]

5) Chairman Wong stated "will use all options to raise more funds!"
- Private placement + dilution was the previous method used!

7) Expect low/no dividends for next 2-3 years!

No wonder someone is willing to sell Tsit Wing shares at 23 cents today which is closed to 1X of price to book.

[greengiraffe]

Dun waste your time on Clipped Wings - I am an odd lot holder for many moons liao. These days when annual report arrives, I dont even want to waste time on it.

The south China story has been around for the longest time but being a distributor in a economy with so much pitfalls is tough. Frankly if co can generate good cashflows, they would have shared with holders already but its a damn tough business with little visibility.

No branding strength in a mkt that does not respect patents whatsoever.

GG

[dydx]

For Chairman/CEO Peter Wong (who is 60 years old and has a 40.1% personal stake in Tsit Wing) to want to spend all the company's cash reserve to build up the company's huge South China Integrated Service Centre production/logistics base in Dongguan in the next 2 to 3 years, either the man is crazy, or he is making the most important business bet of his life after a good dosage of soul-searching and careful planning. I tend to think it is more the latter.

[brattzz]

Agreed on this.

It's an 80 yrs old family biz.
No.1 in HK Market.
Chairman Wong has 40% stake in it.
Before the Donguan SCISC Base is built, it's just plans, now it's realised, next step is more expansion!

Have to track the expansion progress one by one and Quarter by Q, keeping an eye on the finances too.

Next is Successor Plan... by the time this whole expansion plan is completed in 2014-15, Chairman Wong will need a younger leader to take over the ropes..

Next hub will be at shanghai!

I'm still long on this co!