The rights issue was carried out in 2010, after the award of BAT supply contract in Dec 2008.
A New Toyo shareholder who took part in the rights issue owns 60% more shares. His stake in the company remains unchanged, and is not diluted.
"GDP per capita" is GDP divided by number of residents. If this measure is to be extended to New Toyo, the equivalent will be equity per shareholder.
If NAV per share is to be the only true measure for shareholder value, then a one- for - one bonus issue will result in the halving of value -- but clearly this cannot be the case.
(19-08-2014, 12:15 PM)Curiousparty Wrote: [ -> ]Hi Portuser
On further reflection, I feel that it is NOT CORRECT to adjust the NAV as suggested by you.
The fact is that without the rights issue, New Toyo would not have been able to proceed to secure the 7-yr contract with BAT.
Hence, we should include the dilution impact (due to the rights issue), rather than to "adjust" the NAV upwards to remove the dilution impact.
Hence, my former argument stands, i.e. there is no shareholder value created from the point of view of equity holder in New Toyo.
NAV is analogous to "GDP per capita" concept while shareholder's equity is akin to "absolute GDP $".
We need to look at both in most cases. But for this case, NAV is the better measure from each unit of share's pt of view.
Views appreciated pls. tks.
I think you have been thinking too too far from the basic, probably I have not reach your level but generally I do agree with Portuser's view. And by the way, what does it matter on whether any value creation over the past years? Aren't value investing focus more on the future prospect than the past?
Yes, agree that future prospect is more important.
But, New Toyo's BAT contract is set to expire end of next year. If tobacco printing/packaging does not really create value (in terms of NAV) for shareholders, then doesn't it make sense for New Toyo not to proceed with the renewal instead? this is amidst other challenging factors such as declining printing volume, lower profit margin due to product mix, etc.
Do you mean that renewal of BAT contract does actually erode shareholder value? If this is not the case, why do you bother then?
The securing of the new BAT contract back in 2008 did not seem to create new NAV. Going forward, if the capex requirement is still very demanding, then renewal of the BAT contract might be challenging as well.
tks.
(19-08-2014, 03:19 PM)valuebuddies Wrote: [ -> ]Do you mean that renewal of BAT contract does actually erode shareholder value? If this is not the case, why do you bother then?
An old story on SAH (previously 34% owned by New Toyo). But it serves as a good reminder....
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http://atans1.wordpress.com/2011/01/27/d...he-dragon/
New Shanghai Asia, S-Chips
Don’t enter the dragon
In China, Corporate governance on 27/01/2011 at 5:20 am
To avoid being shafted.
I was reading these Shanghai Asia related letters to the press a couple of weeks was and preening myself myself for giving Shanghai Asia a miss several yrs ago. What attracted me then was that the company was making foil paper for cigarette manufacturers. And the Chinese were (and are) smoking all the way to hell.
But fast forward to today and this business is being sold at an unattractive price. Minority shareholders are rightly upset but can’t do anything because the controlling shareholder supports the deal.
I gave it a miss because S-Chips were then in the Wild, Wild West when it came to corporate governance. They still are it seems, notwithstanding the efforts of SGX and the SIAS, the shareholders’ champ, to assure us that S-Chips are well regulated.
Even Chinese companies listed in the US are considered dodgy by this widely followed writer on all things investments.
So let’s give S-Chips that have everything in China except a few independepent directors here a miss, shall we?
South Korea on Thursday proposed a tax hike as early as next year that would nearly double cigarette prices as the government tries to reduce one of the world's highest smoking rates among adult males
Printing volume by Tien Wah/New Toyo bounded for Korea will continue to drop given the above development.
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[SEOUL] South Korea on Thursday proposed a tax hike as early as next year that would nearly double cigarette prices as the government tries to reduce one of the world's highest smoking rates among adult males.
The proposal, which needs to be approved by parliament, sent shares in dominant tobacco maker, government-backed KT&G Corp , down more than 5 per cent.
It was also immediately criticised by the main opposition party, highlighting the difficulty in implementing anti-smoking regulations in a country where the health risks associated with smoking are not widely publicised.
The proposal calls for a more than 100 percent tax increase on a pack of cigarettes, which would double current prices that range between 2,000 won and 2,500 won (US$1.9-US$2.4) - far less than the US$12 per pack that smokers pay in Australia, which recently toughened its anti-smoking laws.
The initiative also suggested banning cigarette advertisements in convenience stores and making graphic warning labels on cigarette packs mandatory.
KT&G, which sells 60 per cent of all cigarettes bought in the country, declined to comment on the tax proposal.
South Koreans are among the heaviest smokers in the world: just under half of all adult males smoke, government data shows, compared to an average of 25.4 per cent in the 34 countries that are members of the Organisation for Economic Cooperation and Development.
The government said it expected higher cigarette prices to deter teenagers from picking up the habit, as research showed youth were up to four times more price-conscious than adults.
The proposal, however, is likely to face an uphill battle in parliament after the main opposition party, the New Politics Alliance for Democracy, dismissed it. "It is a trick to make up for the revenue shortage by emptying the pockets of working-class people and smokers," party spokesman Kim Young-geun told reporters in parliament. The tobacco tax could boost tax revenue by 2.8 trillion won (US$2.7 billion) per year, the government said.
A Seoul-based official at a foreign tobacco company also criticised the proposed price increase. "The one-off drastic price hike like this is unlikely to result in the (intended) drop in the smoking rate while at the same time creating many side-effects such as smuggling and fake tobacco products," the executive said, declining to be named due to the sensitivity of the matter. - Reuters
[SEOUL] South Korea on Thursday proposed a steep 80 percent hike in cigarette prices to cut consumption in a nation with one of the world's highest male smoking rates.
The decision requires parliamentary approval, but Health Minister Moon Hyung-Pyo said it was necessary to counter what has become the "biggest threat to national health".
The proposal would see the average price of a packet of cigarettes rise from 2,500 won (US$2.42) to 4,500 won from January 1 next year.
Moon said his ministry predicted the increase would help cut tobacco consumption by 34 per cent and raise annual tax revenues by 2.8 trillion won.
Around 44 per cent of adult South Korean men are smokers, the highest rate among member countries of the Organisation for Economic Cooperation and Development.
The government has taken a series of measures in recent years to bring down the rate, including a ban on smoking in public places.
As well as the price hike announced Thursday, Moon said tobacco packaging would have to include pictures of the harm caused by smoking, while tobacco ads would be banned in retail stores.
"We hope our comprehensive anti-smoking measures will lead to a considerable cut in smoking and social spending on health," Moon said.
The Korean Smoking Association has opposed the increase, accusing the government of scapegoating smokers to raise tax revenues and offset rising welfare costs.
The government has promised to spend 316 trillion won between now and 2018 on social welfare. - AFP
Curious buddie... u are autistic or what... if u think that these guys are cheats, just walked away... if you are not sick, many are sick ok...