New Toyo

[Curiousparty]

Lehman's brother HAD more than 150 years of history.

maybe I am more pessimistic. In this world of business, "Change" is the only constant.

Amvig (pure tobacco printing and packing) performance has been quite consistent.

To phrase it as 'justify holding onto' seems a little too strong. For a company to be established in 1975 and undergone all the ups and downs within this period, you have to give management some faith. It is undeniably that recently, New Toyo have experienced some problems, however, it is more like an industry level problem rather than company specific.

(not vested)

How do u justify holding onto New Toyo when the printing profit had been deteriorating since Q3 last year?

In fact, Q1-2014 was even worse off compared to the Q1 2 years ago when they had included some one-off admin cost. Compared to Q1 last year, it was off by so much.

this does not seem to justify the claim that the business is resilient? Am I right?

Tobacco manufacturing is resilient because they can pass on drop in volume in the form of price hike to consumer, so overall the revenue (higher price x lower volume ) is still higher than before because the elasticity of demand is inelastic.

But this cannot be said for the printing industries supporting the Tobacco makers
Any drop in printing volume will hit them straight in the revenue and profit margin since economies of scale is totally lost, and unit cost will be jacked up. If this plain packaging fire were to continue spreading, I'm sure the printing volume would decline further. The entire dynamic might be changed.

This decline in printing revenue had been explained by Tien Wah in its FY13 Annual Report and this trend seems set to continue in an environment where regulatory risks are skewed against printers like Tien Wah/New Toyo.

Although New Toyo/Tien Wah might have a few pieces of "under-valued" assets scattered here and there, I realized that these would take many years before their value would be realized if any. There is a possibility that their value might never be realized at all, given that there is NO PLAN in the foreseeable future to go into property redevelopment.

This view was further reinforced/confirmed thru interactions with the management during the last 2 AGMs. The key focus is to serve BAT and not property redevelopment.

The one thing I truly learnt about New Toyo is that honestly there is no way for u to track its performance using information readily available from the market. Do u know how much does one printer print each day? The revenue or cost from one printer? Do u know how to derive the COGs for Tien Wah and New Toyo?

When i decided to invest in New Toyo, my decision was never on how they are gg to develop their properties or what is the output and cost of the printers. Even if you know the output and cost, how will that help in decision-making? In order to find out where New Toyo stands, you will need all the numbers from other similar competitors at an industry level. Such stuff are not accessible to most investors.


For me, the main points of New Toyo are:
- Strong cash flow generated Qtr after Qtr, cash pile building up
- no accounting tricks, not highly leveraged
- they are in a defensive and resiliant business
- contract with BAT which will ensure recurring revenue

[Curiousparty]

The scariest part is Mr Yen pledged quite a substantial proportion of his shares in New Toyo for the purpose of getting loans outside.

A lot of people may argue that it is nothing new and nothing surprising. But have u ever envisioned the situation if he were to default on his loan payment. The lender will enforce the selling of millions of shares...

[theasiareport]

Yeah... but the shares would than just end up in the hands of another party.

Regards,
theasiareport.com

The scariest part is Mr Yen pledged quite a substantial proportion of his shares in New Toyo for the purpose of getting loans outside.

A lot of people may argue that it is nothing new and nothing surprising. But have u ever envisioned the situation if he were to default on his loan payment. The lender will enforce the selling of millions of shares...

[cywong76]

Yeah... but the shares would than just end up in the hands of another party.

Regards,
theasiareport.com

The scariest part is Mr Yen pledged quite a substantial proportion of his shares in New Toyo for the purpose of getting loans outside.

A lot of people may argue that it is nothing new and nothing surprising. But have u ever envisioned the situation if he were to default on his loan payment. The lender will enforce the selling of millions of shares...

that would mean drop in share prices if there are so much supply in the market

[theasiareport]

Yes no doubt that would happen in the short run if a forced seller comes along.

But (1) You don't need a massive sell-off to create price drops and (2) Such forced selling is temporary and doesn't change the business fundamentals.

Arguably, if the business remains the same, such panic selling is exactly what value investors are looking for.

Regards,
theasiareport.com

Yeah... but the shares would than just end up in the hands of another party.

Regards,
theasiareport.com

The scariest part is Mr Yen pledged quite a substantial proportion of his shares in New Toyo for the purpose of getting loans outside.

A lot of people may argue that it is nothing new and nothing surprising. But have u ever envisioned the situation if he were to default on his loan payment. The lender will enforce the selling of millions of shares...

that would mean drop in share prices if there are so much supply in the market

[yeokiwi]

I never have bad intentions . I qualified each statement I made. I never insulted anyone.

I am laying everyone the information from a shareholder point of view.

i do hope the moderators are watching his posts and will do the necessary to make the forum a better place for everyone to share information with good intentions.

The moderator is watching. No moderation needed so far

Everyone is entitled to post his/her view, as long as it is not baseless, and no violation of posting guidelines. All buddies are presumed to share info with good intention, unless otherwise proven.

Thank

Regards
Moderator

Same as SGX loh, if the moderator thinks that there is some foul play or clones' cross chatting to each other in any stock thread, just drop it into the sub-board for one month.
Apparently, there is dramatic reduction of current affairs(from one particular forum member) posting after the "Others" is put to sub-board. I am amazed.

[cywong76]

The approach has always been relative valuation. Can New Toyo go up 50% to 100% from current price level? (very unlikely).
[It has not even firmed up any plans for property development since it is "struggling" with challenges on the printing business with BAT]
Management has no intention to do any share price repurchase and this speaks volume about the assurance they are giving to shareholders.
Plus the recent riots in Vietnam could have seriously disrupted their printing operations, especially at a time when they are trying to consolidate all their printing in Vietnam (i.e. country risk).
Plus the printing volumes/revenues/profit margin/profit have been declining drastically in the last few quarters and this trend seems set to continue.

I'm not trying to add fuel to the fire. But frankly speaking, how many counters can go up 50% or 100% in the near term? By stating those figures, what is the timeframe you have? 1 year or 5 years?

I'm vested in New Toyo for many years and have added my holdings during the rights issues. It's just a pure dividend play counter. Those who bought during the rights issues would probably be laughing now.

[Curiousparty]

The key words are "those who bought during rights issue".

if there is rights issue price now, then I agree New Toyo is good value.

tks.

The approach has always been relative valuation. Can New Toyo go up 50% to 100% from current price level? (very unlikely).
[It has not even firmed up any plans for property development since it is "struggling" with challenges on the printing business with BAT]
Management has no intention to do any share price repurchase and this speaks volume about the assurance they are giving to shareholders.
Plus the recent riots in Vietnam could have seriously disrupted their printing operations, especially at a time when they are trying to consolidate all their printing in Vietnam (i.e. country risk).
Plus the printing volumes/revenues/profit margin/profit have been declining drastically in the last few quarters and this trend seems set to continue.

I'm not trying to add fuel to the fire. But frankly speaking, how many counters can go up 50% or 100% in the near term? By stating those figures, what is the timeframe you have? 1 year or 5 years?

I'm vested in New Toyo for many years and have added my holdings during the rights issues. It's just a pure dividend play counter. Those who bought during the rights issues would probably be laughing now.

[cywong76]

The key words are "those who bought during rights issue".

if there is rights issue price now, then I agree New Toyo is good value.

tks.

The approach has always been relative valuation. Can New Toyo go up 50% to 100% from current price level? (very unlikely).
[It has not even firmed up any plans for property development since it is "struggling" with challenges on the printing business with BAT]
Management has no intention to do any share price repurchase and this speaks volume about the assurance they are giving to shareholders.
Plus the recent riots in Vietnam could have seriously disrupted their printing operations, especially at a time when they are trying to consolidate all their printing in Vietnam (i.e. country risk).
Plus the printing volumes/revenues/profit margin/profit have been declining drastically in the last few quarters and this trend seems set to continue.

I'm not trying to add fuel to the fire. But frankly speaking, how many counters can go up 50% or 100% in the near term? By stating those figures, what is the timeframe you have? 1 year or 5 years?

I'm vested in New Toyo for many years and have added my holdings during the rights issues. It's just a pure dividend play counter. Those who bought during the rights issues would probably be laughing now.

well, as long term value investor, I bought during the rights issues and applied for excess too.

[Curiousparty]

At 29 cents, New Toyo might be already overvalued.

29 cents - 12.5 cents (cash) = 16.5 cents

Assuming FY14 EPS = 3 cents (assuming 15% reduction from FY13), 16.5 cents result in P/E of 5.5, very reasonable for a business which consists of general printing and tobacco printing.

My basis is that Amvig which is a pure tobacco printing/packaging, with a much higher profit margin is only trading at P/E of 6 plus in HONG KONG.