Adampak

[Drizzt]

actually wouldnt that move the needed storage to the server thus making them require more haha

[FFNow]

Tablets and Smartphones— The End of HDDs? - Seagate's Point of View 2011 - http://www.seagate.com/docs/pdf/corporat...es_gen.pdf

[freedom]

actually wouldnt that move the needed storage to the server thus making them require more haha

i think you need read my earlier comment on HDD demands for cloud and enterprise computing, as well as the article provided by yeokiwi.

sadly to say, moving storage from client to server can't make up much reduced sales from clients as the storage utilization ratio is too high for enterprise and the duplication of data is also reduced greatly.

[Nick]

Whether HDD replace SSD is immaterial as Adampak labels can be used for either products. Unfortunately, Adampak strength lies in its relationships with its clients built over decades and backed by years of reliable delivery and consistent quality control. This means that since Adampak doesn't count the likes of Intel and Samsung as its clients, it will be difficult for it to muscle it way through and supply labels to these companies as its rivals will also enjoy the same moat. In other words, the more pertinent issue is whether can its current clients - Western Digital and Seagate - penetrate the SSD and Flash market by manufacturing its own products or acquiring smaller SSD manufacturers. If they do pull it off, then there is a decent chance that Adampak will manufacture labels for those new products as well. Recently, there have been steps under-taken by the HDD giants to enter this market so we cannot rule it out. Personally, if those companies fail to penetrate into SSD and HDD do get replaced, Adampak revenue will take a hit if they fail to diversify in time (> 3 years time ?).

Yet, I think Adampak will most likely carry on diversifying its revenue by finding new clients in different industries (pharmaceutical, logistics, f&b etc) or acquiring companies with its $13 million cash hoard to expand its product offerings. Its non-HDD revenue has expanded from $11.7 million in 2005 to $30.0 million in 2010. Ultimately, the first issue deals with things which the Management cannot control but the second issue is something which they can pursue and turn to their advantage eventually. Let's see how it goes.

(Vested)

[freedom]

the value Adampak really adds for HDD is not the conventional labels.

read more from adampak's web site: http://www.adampak.com/Products/Precision.htm .

of course Adampak produces conventional labels as well, but what is so difficult to prevent others printing the same conventional label? The vaue added for HDD is Adampak's real strength, not conventional labels.

just my personal opinion only, feel free to correct.

[FFNow]

The labels are called "high performance labels" and they are the same as this if I'm not wrong - http://www.imagelabels.in/high_performance_labels.html . They should be able to withstand high temperatures unlike conventional labels used in supermarkets.

---

While not the exact same thing that Adampak produces, this technical paper should help us understand better the insides of the labels- http://www.newark.com/pdfs/techarticles/...lation.pdf

[dydx]

I think in our discussion here we must not forget that Adampak as an expert producer of high-precision labels and die-cut parts is merely a converter but a bloody-good one! Adampak does not produce the multitude of facestocks and the many different types of performance adhesives coated on them - the 2 main groups of raw materials behind the manufacture of the final high-precision labels and die-cut parts through a conversion process in Adampak involving mainly precision printing and die-cutting. The risks associated with a label converter actually are quite reasonable when compared with those of manufacturers of high-tech products.

Adampak's consistent and above-average profitability and the resultant good and increasing dividend payout over the years have certainly brought great cash returns to its shareholders. This alone will attract serious trade and institutional investors to consider buying the entire business. A relevant question: Would this happen soon since Mr Anthony Tay as the largest shareholder has recently shown some signs of retiring from the business?

Another relevant question: How much can Adampak's business fetch in a trade sale or a sale to an institutional investor? $100.0m? Or more - say $120.0m?

[julianbream]

Dydx,

Is that a rhetorical SGD 100 to 120 million you are estimating or a rhetorical USD 100 to 120 million?

If it's SGD, then SGD 100 million for the entire business gives only SGD 0.38 per share, which seems on the low side. If on the other hand, it is USD 100 million (or SGD 130 million) then it's more like SGD 0.49 per share, which seems more like it to me.

[dydx]

Based on Adampak's 263.625m outstanding issued shares and the last done price of $0.28, Mr Market is now only prepared to attach a value of approx. $73.8m on this gem-grade business. Quite obviously, this appears on the low-side, as Adampak's intrinsic value should be a lot higher, likely even exceeding $120.0m, or approx. $0.46 a share.

But we must always bear in mind that a deal on Mr Anthony Tay's 32.24% block (85.0m shares) will likely be done on a willing buyer - willing seller basis, likely at a price giving the willing buyer at least a small advantage below Adampak's theoretical intrinsic value.

In Jun07, Mr Tay ever sold a 15.0m block of shares to Prudential at $0.435....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
and I suppose this price remains a useful guide for how Mr Tay would look at the current value of each Adampak share should he decide to sell his remaining 85.0m block. Of course, we must also bear in mind that Adampak's business has grown a lot bigger since Jun07, and of the prevailing depressed state of the stock market.

[julianbream]

I see, thank you sir. I was personally hoping for a nice round $0.50 per share in a trade sale. And following on from your point about how the biz has grown (some 30% from 2007 to 2010), it seems to logically follow that what Mr Tay wanted then in 2007 would be different from what he would want now