TeckWah

[SLC81]

Website
http://www.teckwah.com.sg/
Financial Highlight
FY09
Share price $ 0.33
EPS - 5.22 cents
NTA - 37.79
ROE - 12.8%
Netcash: $ 43 Millions or ~ 15 cents/share

Generous dividends (Paid out more than 10 cents since 2007, 3 cents in FY10 alone) and is likely to pay our more due to high net cash and positive cash flow.

http://www.sgx.com/wps/portal/marketplac...ate_action

Annual reports
http://www.teckwah.com.sg/investor-relat...eport.html

Business and management

Printing, Packaging and logistics (or supply chain management) customers are Microsoft, HP.. and they have been with Teckwah for many years to speak for Teckwah ability to deliver good quality of services and yet still making good profit . Revenue mostly from Singapore and China, had tried to break in Australia, Korea for online game distribution to diversify from the the main business that they claimed to know inside out few years back but was not successful. Ventured into China in late 199x to Flexible packaging business and lost quite a bit of money due to some local management issue but now the business has turned in some decent profit after they brought out China's partner.

Management has proved that they are capable by delivering 100% profit increase last year during the 2009 crisis by cutting wages, improve productivity and part of that was due to lower raw material cost.

The big risk is material cost which may affect the profitability

The management has paid out more than 10 cents to share holders since 2007 through dividend. Last year Ho Bee investment ltd had been buying up shares and became a major shareholder.

Not very exciting for investor looking for growth but stable and conservatively managed and to appreciate, we should look at another listed peer IPSCOM international Press Softcom which have been losing money.

I have vested interest on this counter, discussion on Teckwah is wellcome

[SLC81]

Techwah ( Teckwah PharmaPack Solutions Sdn. Bhd) bought 03 freehold detached factories strategically located at Iskandar Development Zone which has close proximity to Singapore through the Second Link Bridge for RM15.7 million to it expand its pharmaceutical packaging production facilities


http://info.sgx.com/webcoranncatth.nsf/V...C00389F78/$file/Purchase_Properties.pdf?openelement

[FFNow]

Isn't the ROE and NPM too low?

[Nick]

Isn't the ROE and NPM too low?

Based on 1H 10 financial statement (http://info.sgx.com/webcoranncatth.nsf/V...E0036AD48/$file/Half_Year_Results30Jun2010.pdf?openelement), the Company has a net margin of 9.8% which I wouldn't consider to be low. But it also depends on its historic margin levels - I hadn't looked at it so I cannot say. If it has averaged around 7-12% levels for the past 5 years, I guess such a NPM is normal.

ROE may seem low with historic ROE at 12% and forward ROE (based on annualized earnings) at 16%. But let's not forget that it holding on to 40 million net cash which is a significant portion of its equity. The cash doesn't add much to the company's profit (besides interest income) so ROE wouldn't reflect the true return of the company's investment in its business.

[SLC81]

Mr. Chua Thian Poh of Ho Bee Investment has increased stake to 7%.
Hope this will not trigger a knee-jerk reaction from Teckwah's other majority share holders as we have seen with what is happening with Poh Tiong Choon

[SLC81]

FY2010 result is out with 2% profit down for the year, EPS is still at 5.3 cents but H2 performance is bad. Even the company managed to bring in 15 Millions last year and still in the net cash position of 40 Mil after paying almost 40% for dividend ..etc

But do take note of the following that may reduce the profit margin in the coming year.
1) Raw materials (oil price)
2) Labor cost (salary hike post crisis/CPF 0.5 percent )

Hoo Bee Investment took the chance of low price to scoop up 1% of company shares last few days

[SLC81]

There is an article about Teckwah on the latest issue of the Edge Singapore which elaborated on the Teckwah business and their focus.

[dydx]

I didn't know Teckwah is big enough to maintain a permanent operation in Tokyo/Japan.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

I am a little impressed!

[jaco]

For those interested in more information about TeckWah, here is a free research report: https://www.gvinvesting.com/Singapore_Reports.html

You will find some more research reports on that website. They are written by some guys who post on a valueforum like this one (InvestorHub). I don't know their backgrounds, but I just like the reports. Read them on their own merit.

[Drizzt]

Teck wah have always have a great balance sheet. it could present value at even lower prices.