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Viz Branz was featured in this week's issue of The Edge Singapore. Quite an interesting article about this company which produces Gold Roast Coffee (this is their main selling product). However, compared with Super Group, their market cap is still much lower; the article details some strategies they plan to undertake to grow revenues/profits. However, they did mention cost of materials had gone up in the last 3 months so they usually bought forward contracts to hedge their risks.
Will do a summary of the article when I have time!
Note: Not vested.
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Ben Chng has been mopping up the shares ever since the stock split.
His stake in Viz Branz has crossed 40%.
With a declared dividend of 0.75cts after stock split, Ah Ben will be receiving about $ 1million in dividend. I suppose he will continue to plough this money back to buy back more Viz Branz share.(about 3000 lots!)
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If one were to spend time observing the behaviour of consumers at the coffee section of supermarkets, it is pretty clear that Gold Roast and CappaRoma are some of the more popular brands. Just ask the supermarket staff which coffee brands thay have to constantly restock. I've conducted this exercise at various NTUC, Cold Storage and Giant Supermarts. Answer is quite consistent.
Vested.
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Apart from Ben Chng's buying more shares from the open-market by taking advantage of some shareholders' willing to sell some of their Viz Branz shares after the recent 2-for-1 stock split, there are 3 identifiable catalyst events ahead which would support the further re-rating of this counter towards its fair value:
1. The coming AR.
2. The coming AGM.
3. Payment of the proposed $0.0075/share (equivalent to $0.015/share before the 2-for-1 stock split) Final dividend for FY10 (ended 30Jun10) expected in Nov10.
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(27-09-2010, 09:56 AM)valuehunter Wrote: If one were to spend time observing the behaviour of consumers at the coffee section of supermarkets, it is pretty clear that Gold Roast and CappaRoma are some of the more popular brands. Just ask the supermarket staff which coffee brands thay have to constantly restock. I've conducted this exercise at various NTUC, Cold Storage and Giant Supermarts. Answer is quite consistent.
Vested.
My own observation in S'pore is that Super Group has by far a much larger market share here, and their products are placed at more prominent eye level shelves compared with VizBranz pdts which are often placed on the bottom shelves.
From the financials, it also seems that Super has gained further mkt share in the South East Asian market, while Viz Branz's sales and profitability in SEA has been shrinking this past 1+ year.
However, Viz Branz growing sales of instant cereals in the 4 southern provinces of China more than make up for their falling sales in SEA, and their strong foothold in the instant cereal market in China will make them a very attractive target for a company like Super Group indeed considering Viz Branz's much cheaper valuation!
The fact that Ben keeps increasing his personal stake in the company also gives me a lot of confidence. It does appear that Ben took the trouble to split the shares so that he can get to personally acquire more shares in the open market when some other shareholders sell the "bonus" shares they received.
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Finally, today Viz Branz managed to cross the $0.30 mark, and closed at $0.31, with a high 3,091 lots transacted and most transactions done at $0.30 and above.
Based on Viz Branz's announcement today, Ben Chng just added a total of 2,332 lots yesterday (28Sep10) at an average price of $0.2929/share (high: $0.295; low: $0.29). His latest shareholding now stands at 43.3451%. Ben Chng has been mopping up the shares practically everyday, before and after the recent 2-for-1 stock split.
Obviously, Ben Chng is not buying to support the share price! If this were his main objective, he wouldn't have to buy everyday in such high volume.
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http://info.sgx.com/webcorannc.nsf/Annou...endocument
With the latest purchase, MD Ben has raised his personal stake from 111.9m shares (adjusted for share split & warrants) as at 14 Sept 2009 to 155.5m shares, or open market purchase of over 43m shares in the past 1 year (some of which purchased through warrants) which would have cost him over S$10m.
I suspect that Ben is buying a good part of these shares on margin, as we did not find his name on the top 20 shareholders' list but several bank nominee accounts were listed instead (unlike the senior Chng who have his entire shareholding held under his personal name).
If that is indeed the case, is Ben being imprudent to significantly raise his stake in Viz Branz on borrowed funds? I do not think so, as he knows his business best, and obviously still find current prices asked by Mr Market attactive versus his company's intrinsic value.
I'll expect Viz Branz to continue paying generous dividends over the next few years, and Ben could well pay down his loan with the dividends quite quickly.
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02-10-2010, 07:20 AM
(This post was last modified: 03-10-2010, 08:54 AM by dydx.)
Very good observation by MrValue! I also agree with his point that Ben will likely cause Viz Branz to continue to pay out generous dividends, which has to be one the main sources of funding for him to increase his personal shareholding.
Based on his large and regular purchases, obviously Ben sees a lot more value in Viz Branz even at the present share price - already at a historically high!. For all we know, Ben may already have something up his sleeve - e.g. like eventually selling a chunk of his and the Chng Family's total shareholdings (or even everything!) in Viz Branz to a strategic investor.
As a useful guide, I think it is also relevant to note that at this point, Super and Food Empire are being valued higher - in both P/NAV and PER terms - by Mr Market.
A relevant question Viz Branz shareholders must ask themselves: Is the current market cap of $107m, derived by the last done share price of $0.30 and the current maximum number of 356.62m issued shares (asuming the remaining warrants are all converted), still low when compared with the fair intrinsic value for the entire business?
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Yes, it's not a bad thing when we have an owner-manager who uses financial leverage for his personal account.
The cost of capital will then be very real to him, and thus he should refrain from making negative NPV investments for the sake of growing the company, and more prone to returning cash idling in the company's bank account back to shareholders.
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Today's announcement shows 3rd-largest shareholder Poh Choo Bin cutting his shareholding to 5.0039% after 2 disposals on 30Sep10 and 1Oct10, totalling 3.0m shares.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
Another announcement today shows Ben Chng having added another 4.6m shares on 30Sep10 and 1Oct10.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
With these purchases, Ben Chng's shareholding now stands at a whopping 45.2722%!
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