Given the declining printing volume from BAT in the last few quarters, Tien Wah now might become more of a liability than asset to New Toyo.
(once u lose the economies of scale from the drop in printing volume, your profit margin will decline sharply as had been seen in Tien Wah results in recent quarters)
Tien Wah had been outright pessimistic in its recent few quarters of financial results. Given the recent riots in Vietnam, the PCL printing volume and revenue might hit another further big hit.
Let's wait for the Q2 results and see.
Hopefully New Toyo new management doesn't try something silly like the tissue paper business which destroyed shareholder value of at least 20 cents EPS (back in 2000~2001).
(20-07-2014, 10:34 AM)greengiraffe Wrote: [ -> ]Aiya,
U still haven't see broken on Toyo meh...
At least they still pay decent dividends on top of milking the company for admin and directors' salary. Not so bad lah...
GG
(20-07-2014, 10:06 AM)Curiousparty Wrote: [ -> ]Before the BAT contract, New Toyo equity was around $100mil. After gaining control of BAT contract equity increased to around $160mil (up to today). A 60% jump. But there is a CATCH.
Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents
fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents
Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).
(20-07-2014, 12:33 PM)Curiousparty Wrote: [ -> ]Given the declining printing volume from BAT in the last few quarters, Tien Wah now might become more of a liability than asset to New Toyo.
(once u lose the economies of scale from the drop in printing volume, your profit margin will decline sharply as had been seen in Tien Wah results in recent quarters)
Tien Wah had been outright pessimistic in its recent few quarters of financial results. Given the recent riots in Vietnam, the PCL printing volume and revenue might hit another further big hit.
Let's wait for the Q2 results and see.
Hopefully New Toyo new management doesn't try something silly like the tissue paper business which destroyed shareholder value of at least 20 cents EPS (back in 2000~2001).
(20-07-2014, 10:34 AM)greengiraffe Wrote: [ -> ]Aiya,
U still haven't see broken on Toyo meh...
At least they still pay decent dividends on top of milking the company for admin and directors' salary. Not so bad lah...
GG
(20-07-2014, 10:06 AM)Curiousparty Wrote: [ -> ]Before the BAT contract, New Toyo equity was around $100mil. After gaining control of BAT contract equity increased to around $160mil (up to today). A 60% jump. But there is a CATCH.
Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents
fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents
Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).
Curiousparty
You have left out two important points.
New Toyo has been paying regular dividends and a special dividend.
A 2 for 5 rights issue at 12c lowered NAV.
What will be your conlusion?
Regular dividends had already been paid pre-BAT period.
Exactly, you hit it on the nail!!
To sustain the new BAT business back in 2008, New Toyo and Tien Wah had to do rights issue!!
This had "diluted" the potential shareholder value created from the new BAT contract, a point often omitted by many investors when they consider the investment merit of New Toyo. On a net basis, the average shareholder had not gained much from the BAT contract.
As an outsider investor, u have no basis and information to estimate/track/monitor the printing volume and cost of production of New Toyo or Tien Wah. When u cannot track a company's performance from outside easily, then it is much easier for management to take u for a ride (IMHO).
let me ask you. Do u know:-
a. what is the printing volume for a typical factory at Tien Wah?
b. how many cartons can a printer print?
c.
How many hours does it operate per day? (knowledge of this item will be useful to estimate the downtown due to e.g. riots in Vietnam, etc)
d. What is the buffer capacity?
In fact, this is one of the greatest risks (i.e. lack of visibility). All u know is that every quarter, the company just kept telling u motherhood statements like "market conditions are challenging, etc"
(20-07-2014, 05:49 PM)Young Investor Wrote: [ -> ] (20-07-2014, 12:33 PM)Curiousparty Wrote: [ -> ]Given the declining printing volume from BAT in the last few quarters, Tien Wah now might become more of a liability than asset to New Toyo.
(once u lose the economies of scale from the drop in printing volume, your profit margin will decline sharply as had been seen in Tien Wah results in recent quarters)
Tien Wah had been outright pessimistic in its recent few quarters of financial results. Given the recent riots in Vietnam, the PCL printing volume and revenue might hit another further big hit.
Let's wait for the Q2 results and see.
Hopefully New Toyo new management doesn't try something silly like the tissue paper business which destroyed shareholder value of at least 20 cents EPS (back in 2000~2001).
(20-07-2014, 10:34 AM)greengiraffe Wrote: [ -> ]Aiya,
U still haven't see broken on Toyo meh...
At least they still pay decent dividends on top of milking the company for admin and directors' salary. Not so bad lah...
GG
(20-07-2014, 10:06 AM)Curiousparty Wrote: [ -> ]Before the BAT contract, New Toyo equity was around $100mil. After gaining control of BAT contract equity increased to around $160mil (up to today). A 60% jump. But there is a CATCH.
Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents
fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents
Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).
Curiousparty
You have left out two important points.
New Toyo has been paying regular dividends and a special dividend.
A 2 for 5 rights issue at 12c lowered NAV.
What will be your conlusion?
I have removed an obviously duplicated post. I assume it was posted by mistake.
Regards
Moderator
(20-07-2014, 12:33 PM)Curiousparty Wrote: [ -> ]Given the declining printing volume from BAT in the last few quarters, Tien Wah now might become more of a liability than asset to New Toyo.
(once u lose the economies of scale from the drop in printing volume, your profit margin will decline sharply as had been seen in Tien Wah results in recent quarters)
Tien Wah had been outright pessimistic in its recent few quarters of financial results. Given the recent riots in Vietnam, the PCL printing volume and revenue might hit another further big hit.
Let's wait for the Q2 results and see.
Hopefully New Toyo new management doesn't try something silly like the tissue paper business which destroyed shareholder value of at least 20 cents EPS (back in 2000~2001).
(20-07-2014, 10:34 AM)greengiraffe Wrote: [ -> ]Aiya,
U still haven't see broken on Toyo meh...
At least they still pay decent dividends on top of milking the company for admin and directors' salary. Not so bad lah...
GG
(20-07-2014, 10:06 AM)Curiousparty Wrote: [ -> ]Before the BAT contract, New Toyo equity was around $100mil. After gaining control of BAT contract equity increased to around $160mil (up to today). A 60% jump. But there is a CATCH.
Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents
fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents
Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).
Curiousparty
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You have left out two important points.
New Toyo has been paying regular dividends and a special dividend.
A 2 for 5 rights issue at 12c lowered NAV.
What will be your conlusion?
Curiosparty
Before the right issue at a low price of 12c in 2010, NAV was 44.83c.
The low issue price resulted in NAV of 33.10c. The right share now has a dividend yield of 14% for several years!
You sang praises of New Toyo on 7 May 2014, saying that
"While those who bought during the IPO might be cursing and swearing, those who bought at the low 20 cents are sitting tightly on their profits and very good dividend yield annually (more than 7% easily)".
I am puzzled why you are signing another tune now.
Your post in May is reporduced below:
"If the shifting of one printing press (i.e. 50% of operations) from Australia to Vietnam can result in a few millions savings to the bottom line, the EPS will be lifted from the current 3.5 cents to about 4 cents (assuming $2mil savings). It is possible that dividend payout to increase, and hence dividend yield to reach 7% and beyond.
For now, we can probably look forward to the following:-
a. As mentioned above, potential savings of a few $mil to bottom-line with the shifting of operations to low-cost Vietnam, further boosting the economies of scales at Vietnam. There is a lot of space for further expansion at the factories in Vietnam. Just take a look at the no of hectares being catered for in Vietnam to get a rough sense.
b. BAT's inroads into new markets such as the Philippines and Myanmar will bring more printing volumes to the PCL (printed carton & label) segment.
c. On the specialty paper front, new customers in the Middle east are likely to bring in more businesses as well, boosting the recent recovery in this segment.
d. Although property redevelopment will take quite a while to materialize, it is comforting to note that these assets are recorded at book value on New Toyo's books. These hidden gems will shine one day while the core business continues to bring in the steady cash flow.
e. Asia Pacific is a burgeoning market for the Big Tobaccos (big population growth + rising income). With its war chest of $60mil of cash (and more to come due to strong cash flow from core business), New Toyo/Tien Wah will stand ready to assist with BAT and PMI in certain segments of their tobacco businesses when the opportunities arise (e.g. supply chain management, etc)
While those who bought during the IPO might be cursing and swearing, those who bought at the low 20 cents are sitting tightly on their profits and very good dividend yield annually (more than 7% easily) ."
Had we used the NAV before right issue of 44.83 cents (post-BAT) vs pre-BAT (36.3 cents), the NAV gain was a meager 24%.
Without the rights issue, New Toyo/Tien Wah would not have been able to secure the business from BAT.
it is not about singing another tune. it is about looking at New Toyo with a fresh new len. tks.
No vested interest but not sure how an event in 2010 can result in difference in opinion in 2 months' with a "new" lens?
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.
Beside the riot in Vietnam what else in your post has changed in past 2 months? Certainly not the NAV, excluding these 2 months PnL
IMHO we need to be objective on what has changed rather than have a selection bias.