New Toyo

[Curiousparty]

Amcor wants to expand more into markets in other regions of Asia including fast developing economies like Vietnam, etc...

And New Toyo already has a very strong foothold/presence in Vietnam.....


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Global packaging company Amcor has announced an agreement to acquire Australia-based Aperio Group for $238m.

Amcor said the acquisition is a strategic addition to its flexible packaging business in Asia Pacific, which will now be able to supply from an extensive footprint in Asia.

The acquisition is set to add 13 sites to the existing 21 sites of Amcor's Flexibles Asia Pacific Business Group, which is expected to generate a turnover of about A$1.2bn ($1.2bn) from its 34 plants across Asia Pacific, post acquisition.

The purchase is expected to boost Amcor's earnings before interest, taxation, depreciation and amortisation (EBITDA) by $40m, putting it on a purchase multiple of six times.

Net synergy benefits and the net cash cost to achieve the synergies is expected to be about A$25m ($26m).

According to Amcor, the purchase is expected to deliver more than 20% return on investment by the third year after the acquisition, including capital spending synergies.

The acquisition, for which funding will be from existing facilities, will deliver benefits to customers in Australia, New Zealand and Thailand.

The transaction is subject to regulatory and other usual conditions, including Australian Competition and Consumer Commission (ACCC) approval, which intends to make a final decision on 29 March 2012.

Nera Communications being bought out at P/E - 12
China Healthcare bought out at P/E - 20; NAV - 2.2 times

In searching for a basis of valuing New Toyo, you may refer to Amcor's announcement to SGX on its acquisition of Aperio at six times of EBITDA.
New Toyo's 2011 EBITDA is around $45m. Six times of this is $270m, or 60 cents per share.

But this is provided New Toyo is for sale and a willing buyer is as like-minded as Amcor.

[Curiousparty]

Someone just took out the sellers at SAH at 19.1 cents....probably signs that payout is coming..

but based on calculation, max payout by SAH is only 19.6 cents (if all paid out at one go).

One should focus on New Toyo - 19.6 cents in SAH will translate in 13 cents of payout by New Toyo (if all paid out in one go)

[rexace]

I maintain a 5-6c payout will propel the stk to 35-37c.
a 13c payout will see 40-42

Someone just took out the sellers at SAH at 19.1 cents....probably signs that payout is coming..

but based on calculation, max payout by SAH is only 19.6 cents (if all paid out at one go).

One should focus on New Toyo - 19.6 cents in SAH will translate in 13 cents of payout by New Toyo (if all paid out in one go)

[Curiousparty]

Dear Rexace

35 cents to 37 cents is inclusive of 5 to 6 cents payout?

The payout is unlikely to be in one go (i.e. 13 cents ) but likely to be a quick succession of 1st batch followed by 2nd batch..

then what will be the price impact?
How about all the investment properties component?

[rexace]

Dear Curiousparty,

I am positing my most conservative expectation , simply because this website is called valuebuddies.

if this website is called bangbangbuddies, then I would be saying it'll be worth well over 50c.

New Toyo is not a syndicate stk, and will never be. thus it will always go up step by step when each milestone of realization is achieved.

let's focus on the most immediate payout for SAH first.

even including the potential payout of 5-6c, and a price target of 35-37c, still translates to a very respectable 16-23% return on current price.

future price appreciation will depend on whether the so called liquidation of properties , full payment from SAH or whether amcor is looking to acquire come to realization.

Dear Rexace

35 cents to 37 cents is inclusive of 5 to 6 cents payout?

The payout is unlikely to be in one go (i.e. 13 cents ) but likely to be a quick succession of 1st batch followed by 2nd batch..

then what will be the price impact?
How about all the investment properties component?

[ValueBeliever]

Some years ago stumbled into Sim Lian without any reason except that its EPS was high and it wasnt rewarding sharehldrs, then came DDBS scheme for their 1st maiden Tampines project. I went to the show room and found that there were indeed many ppl admiring the quality of their work.

I started to accummulate this counter for no other reason than hoping 1 day they will give a surprise earnings for a PE of 3-4. At that time construction stock were mostly trading betw 8-10.

If by the same reasoning - New Toyo PE for next reporting prove too low vs the market avg PE for similar industry. We should see prices at least a 30% jump in price for a start and throw in the dividend, we could see a run just like other dividend driven shares, plus the fact that growth from their investment start flowing in, we are in for a long term reward if dividend could be raised further as share price rise!!

Hope mgmt promise to distribute the fund to raise their self worth thru equity is the right approach, as equity is probably their single largest holding.

[rexace]

Curiousparty, I hope u do not shoot yourself in the foot by saying that.

from my experience, the ones who really know what is going to happen, will not dare say it out, especially in a public forum

but of course, we all hope that u r right eventually

It is not a case of whether SAH dividend payout to New Toyo will translate into actual payout by New Toyo itself.

It is a matter of time Mark my word

[Curiousparty]

I based my analysis on the debt ratio of New Toyo which is very sustainable at the current rate, supported by strong cashflow from operations.

Of course, if management chooses not to pay out more, just too bad. maybe management has better investment ideas to generate profits with the payout from SAH

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Curiousparty, I hope u do not shoot yourself in the foot by saying that.

from my experience, the ones who really know what is going to happen, will not dare say it out, especially in a public forum

but of course, we all hope that u r right eventually

It is not a case of whether SAH dividend payout to New Toyo will translate into actual payout by New Toyo itself.

It is a matter of time Mark my word

[Curiousparty]

As mentioned by Portuser before, New Toyo's own borrowing is only $28mil. Total sales proceeds attributable to New Toyo (from SAH) = $58mil.

If New Toyo decides to pay off every cent of its debt,
there is still $30mil left for distribution or 6.8 cents!.

If you are equity owners of New Toyo, why would you want to pay off every single cent of your debt and risk straining relationships with your bankers...Moreover, strong cashflow from existing operations will allow the debt to be pared down over a few years without new sources of funding...

This is where I am coming from when I said "the payout will be very substantial"

This is just a personal conviction. Not an induction to buy or sell

Good profit as well as strong cash flow has enabled New Toyo to pare its bank borrowings, from $89m as at 31 Dec 2010 to $73m a year later.

Of the $73m, $45m was incurred by Tien Wah. New Toyo's own borrowings amounted to $28m only.

I hope New Toyo will pay out a substantial portion of the special dividend it receives from Shanghai Asia (after completion of the assets sale).

New Toyo's attributable profit of $19.8m is after making a provision of $2.25m for the proposed ex-gratia retirement gratuity to Mr Yen (subject to approval by minority shareholders). Mr Yen spent more than 35 years, building New Toyo, from scratch, into a significant regional packaging group.

[potatolover]

Just cannot understand the following logic:-

a. Buy SAH say at 18.5 cents; possibly get back 19.6 cents max - Gain = 5.9% only...

b. Buy New Toyo say at 30 cents, 19.6 cents of SAH should translate in 13 cents EPS in New Toyo or gain of 43%!!

Am I missing something out?
Or the market is simply so irrational?

Any views pls??

As mentioned by Portuser before, New Toyo's own borrowing is only $28mil. Total sales proceeds attributable to New Toyo (from SAH) = $58mil.

If New Toyo decides to pay off every cent of its debt,
there is still $30mil left for distribution or 6.8 cents!.

If you are equity owners of New Toyo, why would you want to pay off every single cent of your debt and risk straining relationships with your bankers...Moreover, strong cashflow from existing operations will allow the debt to be pared down over a few years without new sources of funding...

This is where I am coming from when I said "the payout will be very substantial"

This is just a personal conviction. Not an induction to buy or sell

Good profit as well as strong cash flow has enabled New Toyo to pare its bank borrowings, from $89m as at 31 Dec 2010 to $73m a year later.

Of the $73m, $45m was incurred by Tien Wah. New Toyo's own borrowings amounted to $28m only.

I hope New Toyo will pay out a substantial portion of the special dividend it receives from Shanghai Asia (after completion of the assets sale).

New Toyo's attributable profit of $19.8m is after making a provision of $2.25m for the proposed ex-gratia retirement gratuity to Mr Yen (subject to approval by minority shareholders). Mr Yen spent more than 35 years, building New Toyo, from scratch, into a significant regional packaging group.