New Toyo

[BlueKelah]

Investment properties is recorded at historical value or current value?

Its recorded at historical value.

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[wahkao]

Investment properties is recorded at historical value or current value?

Its recorded at historical value.

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But under accounting rules, investments must be marked to market annually right?

If its classified as plant property equipment, u can record at historical, then depreciate it yearly

[r0n]

Investment properties is recorded at historical value or current value?

Its recorded at historical value.

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But under accounting rules, investments must be marked to market annually right?

If its classified as plant property equipment, u can record at historical, then depreciate it yearly

Not true. Both Investment Property and Plant, Property and Equipment (PPE) can be stated at cost or fair value(for PPE, called revaluation model, which is fair value less subsequent impairment & depreciation).

[Curiousparty]

How much of New Toyo's PPE pertained to its properties? I wouldn't consider its printing machines which are pretty useless without an accompanying contracts (which needed to be renewed from time to time)

[valuebuddies]

Not true. Both Investment Property and Plant, Property and Equipment (PPE) can be stated at cost or fair value(for PPE, called revaluation model, which is fair value less subsequent impairment & depreciation).

Yes sir!

http://www.valuebuddies.com/thread-2102-...l#pid78950

[valuebuddies]

How much of New Toyo's PPE pertained to its properties? I wouldn't consider its printing machines which are pretty useless without an accompanying contracts (which needed to be renewed from time to time)

what is your take in New Toyo?

[Curiousparty]

My thinking is that New Toyo is probably quite anxious to ensure that BAT renews its contract, but it is at BAT's mercy or bidding, and there is no assurance that BAT will definitely renew it with New Toyo. Even if BAT renews the contract, the volume may become much smaller as BAT parcels out to a few players instead of New Toyo alone.

There are a quite few players out there which BAT can choose to award to (e.g. Amcor, Anvig, etc). If New Toyo can leverage on the lower cost structure in Vietnam, I'm sure those Chinese printers from mainland can duplicate the same strategy as well and do it better.

If u happen to go to AGM, u may wish to "check out" the level of confidence in relation to contract renewal. This is unlike investment properties where owners can rent out for as long as possible. If no leasees, just lower price and u will get one. This is unlike BAT contract where it is a binary outcome. Either u get it or don't. If u don't get it, too bad. EPS = 0 for the next X years.

How much of New Toyo's PPE pertained to its properties? I wouldn't consider its printing machines which are pretty useless without an accompanying contracts (which needed to be renewed from time to time)

what is your take in New Toyo?

[valuebuddies]

I didn't follow much on this thread, but thought you have concluded that there wasn't any value added from the BAT contracts?

[BlueKelah]

CP : BAT loves NT, dun believe go ask Amcor.

Eps = 0? ROFL...


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[Curiousparty]

It is only natural for big tobacco companies such as PMI and BAT to diversify its (packaging) suppliers' risk amongst a few key players in the region (Amcor, Tien Wah, Amvig, etc), and then force the suppliers to compete among themselves for its contract.

In the packaging world, 7 year supply contract was the exception rather than the norm. Going forward, the supply contract period should be much shorter, to the angst of suppliers. It will ensure survival of the fittest for the benefit of tobacco companies.

You might wish to refer to Amvig website for more information on the intensity of competition amongst printers.
http://www.amvig.com/eng/ir/report.asp

You can see that Amvig is much more transparent than Tien Wah/New Toyo in terms of revealing information relating to industry market share and tendering practices .
Despite the seemingly more intense competition in PRC, Amvig EPS has been relatively stable unlike Tien Wah.

(AR 2013 - Amvig)
On the other hand, the implementation of tendering by tobacco groups
(the “Tendering”) has continued to put pressure on the overall selling
prices of the Group’s products. As such, the Group has focused on
reducing costs, improving efficiencies and increasing sales volume through
organic growth to cushion the drop in selling prices. During the year, the management continued to implement its profit improvement programs, which was launched a couple of years ago, to counteract the impact of price reduction as a result of the Tendering. Operational indicators including machine running speed, manning and wastage are constantly monitored. Abnormalities are rectified on a timely basis. New machines were also installed so as to increase productivity, reduce wastages and labor costs. The overall impact on our gross profit margin was mild.


(AR 2012 - Amvig)
The ongoing tendering practices of tobacco groups, in a longer
term, will also benefit the Group through a number of ways
including an increased visibility in the order book for tobacco
packaging products. It will also hasten the consolidation of the
tobacco packaging industry as smaller players will drop out through
more intense competition.


Will struggling Tien Wah be able to renew the next contract ? I think it is still a big question mark at this stage.

tks.