New Toyo

[SLC81]

I think this company fits well for Investors looking for value
NAV = 33.98 ct
Share price 24.5 ct
Dividend yield = 8%

The business is printing and packaging.

The company has 36% stake of Shang Hai Asia which will be sold for net proceed of around $ 190 Mils of which 50% to be distributed so New Toyo portion would be around 34 Millions.

[freedom]

it seems there is some issues about Shanghai Asia.

[freedom]

share some of my readings about New Toyo.

1. the balance sheet.

property, plant and equipment of 107 million, about 110 million debt and only less than 30 million cash.

for a non-asset based company, total shareholders' fund 150 million, PPE of 107 million is really quite a lot. with high PPE, annualized depreciation and amortization of 10+ million, which makes profit margin a bit low.

in 2008, New Toyo and its subsidiary Tien Wah acquired an Austrilian company from British American Tabacco plus an exclusive supply agreement with it for AUD 60 mil, funded all by debt, which increased its debt to current level. in 2010, both New Toyo and its subsidiary Tien Wah did a right issue to raise fund to partially (around SGD 24 million) pay the debt incurred in acquisition in 2008.

cash flow from operation in 2009 around 33 million, free cash flow around 23 million, dividend paid around 7.5 million, interest paid 4 million, not much money left to repay debt. one of the reason debt did not decrease over these years.

still quite a long way to reduce its debt.

2. recent issue with Shanghai Asia.

recently the other major shareholder of Shanghai Asia intended to divest major assets and liabitlity of Shanghai Asia for a bit less than SGD 200 million. the deal looks really shady and New Toyo has not offcially made any announcement about its opinion of the divestment. The carrying value of Shanghai Asia in New Toyo is around 56 million, the share of divestment for New Toyo is around 60 million, the profit contribution of Shanghai Asia to New Toyo is around 6 - 7 million. Although there maybe some gain arising from divestment of Shanghai Asia, the divestment may not return to shareholders and intended to use for other investment opportunity. also, Shanghai Asia should be worth more than just 200 million according its annualized profit SGD 20 million for current financial year.

not induce to buy/sell.

[cif5000]

2. recent issue with Shanghai Asia.

recently the other major shareholder of Shanghai Asia intended to divest major assets and liabitlity of Shanghai Asia for a bit less than SGD 200 million. the deal looks really shady and New Toyo has not offcially made any announcement about its opinion of the divestment. The carrying value of Shanghai Asia in New Toyo is around 56 million, the share of divestment for New Toyo is around 60 million, the profit contribution of Shanghai Asia to New Toyo is around 6 - 7 million. Although there maybe some gain arising from divestment of Shanghai Asia, the divestment may not return to shareholders and intended to use for other investment opportunity. also, Shanghai Asia should be worth more than just 200 million according its annualized profit SGD 20 million for current financial year.

Wouldn't Shanghai Asia be a better buy than New Toyo? What's your thought?

[freedom]

2. recent issue with Shanghai Asia.

recently the other major shareholder of Shanghai Asia intended to divest major assets and liabitlity of Shanghai Asia for a bit less than SGD 200 million. the deal looks really shady and New Toyo has not offcially made any announcement about its opinion of the divestment. The carrying value of Shanghai Asia in New Toyo is around 56 million, the share of divestment for New Toyo is around 60 million, the profit contribution of Shanghai Asia to New Toyo is around 6 - 7 million. Although there maybe some gain arising from divestment of Shanghai Asia, the divestment may not return to shareholders and intended to use for other investment opportunity. also, Shanghai Asia should be worth more than just 200 million according its annualized profit SGD 20 million for current financial year.

Wouldn't Shanghai Asia be a better buy than New Toyo? What's your thought?

I am thinking of the same. currently shanghai asia last traded at 16 cents.

I am reading about Shanghai Asia.

---

one thing I noticed is that both New Toyo and Shanghai Asia has 1/3 of their total assets in PPE and they keep investing into PPE.

I wonder whether the industry heavily depends on PPE...

a glance of Shanghai Asia's recent quarterly report, better balance sheet, 200+ million cash, 200+ million debt all in RMB. a bit concern is increasing receivable(could be higher revenue), but decreasing payable .... draining cash...

[portuser]

New Toyo owns 54% of Tien Wah. Tien Wah's debts therefore form part of New Toyo's.
Tien Wah's bank borrowings are now around 120m ringgit, after rights issue. Tien Wah has strong cash flow of around 40m ringgit -- 3Q's profit of 5.5m ringgit plus an annual depreciation & amortisation of around 21m ringgit.
Tien wah has also recently sold off a property (book value 7.7m ringgit) for 9.2m ringgit.
Chairman of Tien Wah has stated restructuring the group's properties.
New Toyo's borrowings will come down quite quickly.

[portuser]

What have caused the share price of New Toyo to rise in good vol in two consecutive days?

[portuser]

Freedom
In Jan, you wondered why NewToyo was heavy in PPE.
New Toyo's PPE stood at $108m as at 30 Sep 2011. A large part of it (around RM 244m or $97m) belonged to its 54%-owned Tien Wah. High-quality printing, which Tien Wah undertakes, requires expensive equipment.
In fact, Tien Wah had been equipping to cater for special printing requirements by its major customer. Before the new capacities were added, Tien Wah had to engage another printer, incurring high cost.
This explains why Tien Wah fared poorly in 2010, ending with a mere profit of RM 19m.
In 1Q this year, profit was still low at RM4m. In 2Q, profit rose to RM 10m with the cessation of outsourcing (after installation of new equipment) and streamlining work processes. The just-announced 3Q's profit was RM 11m.
The heavy investment in new equipment has improved profit. The improvement is all the more remarkable taking into account RM6m in depreciation & amortisation every quarter.

[potatolover]

To capitalize on the arbitrage pricing, we should actually dump SAH and buy up New Toyo.

SAH share price (21 Dec 2011) - 17.5 cents
[Sales proceeds approx. 20 cents]
Potential Gain = 2.5 cents

New Toyo owns 33% of SAH & 54% of Tien Wah.
Share price (21 Dec 2011) - 23 cents.
Potential Gain = 13 cents.

Strangely, no one is paying any attention to New Toyo and its 54%-owned Tien Wah, whose net profit has doubled.
Tien Wah will make up for the revenue/profit shortfall when SAH is sold off.
And New Toyo will receive lump sum payment amounting to about 13cents per share.
Potentially, New Toyo should worth 23 cents + 13 cents = 35 cents.

Not to forget that the numerous properties that it owns are accounted at book value. If we use market value, then there is an additional premium of 3 cents per share.

All in all, New Toyo is worth 38 cents

[potatolover]

Tien Wah Press Holdings (TWP : MK) rise has been nothing short of spectacular. It should be testing and breaking the all time high resistance of 1.83 again in 2012

With its net profit projected to double in the months ahead, it is no reason to doubt that it should not break the 1.83 level