Dukang Distillers Holdings

[Dividend Warrior]

> As usual, profit up up up..... but again no dividend.

Profit is Vanity, CASH is REALITY

Surprised they choose similar route. Thought they can have more ways to explain?

That's why I love dividends!

[kye_lin]

http://www.nextinsight.net/index.php/sto...97-million

[touzi]

Fidelity Investment has become a substantial shareholder.

http://infopub.sgx.com/FileOpen/FINAL_Fo...eID=256176

Not common for a reputable fund management company to invest in a S-chip.

[Wildreamz]

Fidelity Investment has become a substantial shareholder.

http://infopub.sgx.com/FileOpen/FINAL_Fo...eID=256176

Not common for a reputable fund management company to invest in a S-chip.

Like China Minzhong? 11% Templeton fund investment.

[investingsgx]

Fidelity Investment has become a substantial shareholder.

http://infopub.sgx.com/FileOpen/FINAL_Fo...eID=256176

Not common for a reputable fund management company to invest in a S-chip.

Like China Minzhong? 11% Templeton fund investment.

Good earnings growth, but not yet paying dividends. Any views?

(vested)

[rogerwilco]

Ngo Yit Sung, Dukang Distillers' Corporate and IR Manager, recently answered another round of questions I sent to him via email

Disclosure:
I have Dukang shares. The q & a below IS NOT an invitation to buy or sell Dukang shares. Every investor should do his/her own homework and decide independently.

1. Could you please share a bit more about Dukang's capex/investment plan for the next fiscal year? will the future capex/investment plan be funded internally or are you considering other additional funding resources?

Answer:
We will need to increase our fermentation pools in line with sales increase, this is to ensure the consistency of our baijiu quality. Estimated A&P/Sales ratio will be approximately 12%. However please note that, as we communicated earlier, there is no fix formula to tell how much increase in A&P investment will yield how much increase in sales. There is plan in the pipeline and we will make the appropriate announcement from time to time. It will not be appropriate for me to disclose to you if it's not announced, hope you would understand.

2. According to a recent report by Frost & Sullivan, local governments' protection of local brands, which jeopardizes fair competition in the market is one of the key restraint of the baijiu industry (Bright Future for White Spirits => http://www.chinadaily.com.cn/cndy/2013-0...628616.htm). As Dukang is expanding to neighbouring provinces what is your strategy to overcome this challenge? Related to question no 1, what is Dukang 's view of acquiring local baijiu distillers (local brands) outside Henan? or do you convince that Dukang brand has enough appeal for national market (and therefore will concentrate the capex on Dukang brand)?

Answer:
We will continue to channel our focus and resources to grow Dukang at the moment, so we will not acquire any other brand in near future. We strongly believe the Dukang brand is able to go national due to its heritage and culture. Furthermore, now we are in the MFA(Ministry of Foreign) list with other first-tier brands to be used to serve foreign dignitaries and more than 200 China Embassies worldwide. Note that Dukang was once a national brand and sales was higher than Wuliangye in the 1980s. Through proper management and execution, we believe another round of triumph for Dukang is imminent.

3. As more and more foreign alcohols (wine, beer, bourbon, cognac, scotch, etc) enter China and become more popular, what is Dukang Distillers view on how to make baijiu more appealing for the newer/younger generation/person who has never taste Baijiu before?

Answer:
Baijiu is still the mainstream alcoholic beverages in China, especially in our best selling region in the PRC (like the west, central and north eastern part of China). This is due to the Chinese culture and the extreme cold weather. Baijiu is consumed mostly during meal time. It's rare to see the Chinese drink whiskey when they dine. Wine maybe at first-tier cities like Beijing, Shanghai, Guangzhou, Shenzhen due to the exposure to Western culture. They drink beer during summer but in winter, baijiu is very good for warming up the body.

For now, we will focus on our current strategy to promote the Dukang culture and heritage, we think that the Dukang brand is best for promoting the Chinese culture due to its unparalleled history.

4. In light of competition with top-end manufacturer (Kweichow Moutai, Wuliangye, etc) who entered the middle market and Dukang's frequent mention about the importance of packaging design (IPO prospectus page 33, 37, 109) could you please give more info about Dukang's package design development after the IPO ? is there any seasonality in the packaging design?

Answer:
We have engaged the designer who designed the popular Guojiao 1573 packaging to design the Jiuzu Dukang packaging. There is no seasonality in packaging design.

5. Ever since the acquisition of Dukang brand, the brand has continued to contribute profit and sales contribution to the company. Other than the appeal of the brand name, what factors in Dukang's management view that makes Dukang wine great?

Answer:
The source of water which is from the Dukang spring is unique as it contains mineral beneficial to the human body. The prawns in the Dukang river come in pairs and the ducks which fed on the prawns laid eggs with double egg yolk. We have secured some spring holes and constructed a structure to protect our water source.

As for the sommelier, we currently boast the largest technical team in Henan with 3 national level sommelier and 22 provincial level sommelier. They are the one responsible to come up with quality and popular blend for our products.

6. After Mr Gao Feng sold all his remaining Dukang Distiller's shares, is there any change in the Dukang trademark ownership? (via Yichuan Dukang Jiuzu Asset Management)

Answer:
Mr Gao has entered into 2 agreements with Dukang Distillers during the acquisition in May 2010: 1) To grant irrevocable, long term use of the Dukang trademark to Dukang Distillers, and 2) To transfer the stake of the trademark to the Group at cost whenever the PRC laws allow us to fully own the brand. If there is a transfer in the Dukang trademark ownership, we will ensure that both terms will be in place. We will need to wait till the share transaction to be completed before commenting further.

[drzoidberg]

Let me just start by stating that im an amateur in stocks. Especially in Chinese shares. So bear with me for any noob question =)

I've been reading a bit on this company. And I was wondering if you know who purchased Mr Gao Fengs stocks. If I understood everything correctly, he used to own 65% of all shares in this company, and then he sold 44% of the shares... but to whom? Anonymous institutional owners, to the new management or just to highest bidder on the open market? Is there a list on the largets current shareholders?

Also, I was wondering if there are any compensation to mangement based on stock price? I.e. option based compensation that can risk dilution of shareholder value.

There is a lot of questions regarding their big cash deposits (almost 1/3 of the total cap is cash?). I've understand that SGX has had frauds with this earlier. But how is SGX trying to control that this doesnt happens again? Do they have sufficient control mechanism nowadays?

There seems to be a vast number of brands when it comes to Baiju. Do customer tend to buy the same brand, or do they seek new impulses and test new kinds each time?

Do you know of any site that compiles the financial reports for easy reading? Like "Google Finance". Unfortuntatly Google Finance has not done this for Dukang, and I find compiling such list a bit cumbersome =)

thanks in advance
//drzoidberg

[yeokiwi]

I've been reading a bit on this company. And I was wondering if you know who purchased Mr Gao Fengs stocks. If I understood everything correctly, he used to own 65% of all shares in this company, and then he sold 44% of the shares... but to whom? Anonymous institutional owners, to the new management or just to highest bidder on the open market? Is there a list on the largets current shareholders?

http://sg.sports.yahoo.com/news/dukang-d...00776.html
There were few chinese articles in the past linking Dukang with Li Wei, chairman of Synear Holdings.(delisted recently).

Answer to your second question can be found in Dukang Annual report.

SGX cannot control the cash of any company and going by the record, they probably cannot do much if the fraud happens in China.

I find compiling such list a bit cumbersome

If the information is easily available, what is your edge to rise above the rest of the investment community?

[wahkao]

Today sti rally. But dukang downed. This is a fundamentally good stock that passed many value screen. But still go down. I m trying to figure out why. Anyone can help me?

[kikababoo]

the question comes down to whether you believe the accounts or not. i once hold abit of dukang and (fortunately) sold it above 50cs.

as well as where u have faith in fidelity or not.

people just don't buy their explanation for super heavy capex expansion and not paying dividends (despite that "insane" amt of cash balance on its books, at least fujian zhenyu and sunpower group pays abit of dividends).