Fu Yu Corporation

[morten]

I just took a glance at their dividend history... there is none since 2007 ?!?!?!

[sgpunter]

The business has been suffering losses since FY06-09 with a minor profit in FY10 and losses again in FY11-12. The business only started turning around in FY13 and 14. So many years of losses how to pay dividend.

My thinking is they may do something similar like what Global Testing did which is to consolidate shares and return some capital to shareholders which would boost share price.

This is a turnaround play so in my view, historical view is bound to be ugly similar to another counter I hold named Avi-Tech. Going forward, if Fu Yu is able to show sustained profitability, I am certain dividends should resume and share price should also correspondingly go up.

Lets see.

[Townboy]

Low oil price should help Fu Yu business but once it goes up, business will be challenging.

- vested

[sgpunter]

Accumulation in progress...chomp chomp

[yawnyawn]

Fu Yu has net cash of $88M against market cap of $94M. Made $11M last year.

Comparing against similiar companies like Sunningdale and Fischer Tech, it has a cheaper valuation if cash is stripped out. However, it does not pay a dividend like the other two companies.

Did i see a bargain here or i missed something out?

(recently vested)

[Townboy]

Fu Yu hit a high of 14.3cts today and closed at 14.1cts.

- divested but still keeping a small stake

[desmondxyz]

http://infopub.sgx.com/FileOpen/Announce...eID=344809

PROPOSED CAPITAL REDUCTION AND PROPOSED CASH DISTRIBUTION (S$0.005) TO SHAREHOLDERS

The Proposed Capital Reduction and the Proposed Cash Distribution will be effected in the following manner:
a) Reducing the issued and paid-up share capital of the Company by S$19,018,747.07 from S$121,176,743.27 (as at the date of this announcement) to S$102,157,996.21;

b) An amount equal to S$15,253,773.19, being part of the credit arising from the cancellation of the issued and paid-up share capital of the Company, will be applied
to write off the Accumulated Losses; and

c) The remaining amount of S$3,764,973.88, being part of the credit arising from the cancellation of the issued and paid-up share capital of the Company, will be paid out to Shareholders on the basis of their shareholdings in the Company as at
the Books Closure Date.


Anyone know more about capital reduction? how does it work? Who is at the loss under capital reduction?

[yawnyawn]

http://infopub.sgx.com/FileOpen/Announce...eID=344809

PROPOSED CAPITAL REDUCTION AND PROPOSED CASH DISTRIBUTION (S$0.005) TO SHAREHOLDERS

The Proposed Capital Reduction and the Proposed Cash Distribution will be effected in the following manner:
a) Reducing the issued and paid-up share capital of the Company by S$19,018,747.07 from S$121,176,743.27 (as at the date of this announcement) to S$102,157,996.21;

b) An amount equal to S$15,253,773.19, being part of the credit arising from the cancellation of the issued and paid-up share capital of the Company, will be applied
to write off the Accumulated Losses; and

c) The remaining amount of S$3,764,973.88, being part of the credit arising from the cancellation of the issued and paid-up share capital of the Company, will be paid out to Shareholders on the basis of their shareholdings in the Company as at
the Books Closure Date.


Anyone know more about capital reduction? how does it work? Who is at the loss under capital reduction?

From investopedia,
DEFINITION of 'Capital Reduction'
The process of decreasing a company's shareholder equity through share cancellations and share repurchases. The reduction of capital is done by companies for numerous reasons including increasing shareholder value and producing a more efficient capital structure

0.5c to be paid out to shareholders. 3.3% at last close and writing off accumulated losses will reduce equity and increase the ROE of the business. Happily vested and waiting for the business to turn around and company to start paying a dividend!

[sgpunter]

This exercise is in my view a signal to the market that the company is comfortable enough and intends to start dishing out dividends for profitable years going ahead.

Keep a close lookout on upcoming 1Q results to determine whether profitability is sustainable. While this counter has run up quite a bit since I last mentioned it, I hold the view that there is more upside to come. Akan Datang

[specuvestor]

Anyone know more about capital reduction? how does it work? Who is at the loss under capital reduction?

There are usually 3 broad reasons to do capital reduction. In Singapore IIRC it needs court approval.

1) Too much capital due to high amount of retained earnings and capital repayment do not attract tax.

This form of capital repayment actually has cashflow to the shareholders and not just purely accounting.

2) Restructuring of a weak financials by reducing capital for exisitng shareholders and most probably to increase capital soon via placement, rights debt to equity swap, etc.

3) Erase losses

This enables the company to pay dividend going forward if it starts making money instead of recouping the losses first before being able to pay out.

From Finance 101 perspective, there is little difference because it is just accounting entries from capital to accumulated losses. But practically the signaling is that management longer term view is being crystalised.

What I don't know is whether there is any tax impact if any adjustment from tax loss carried forward

FuYu seems to be doing seemingly contradictory both 1) & 3) at same time, but this is a 20 year old listco with depreciated assets.