China Minzhong Food Corporation

It is good that the company tries to optimize its capital structure, with short term working capital loan and long term debt against its fixed assets. The important question now is what the company is going to do with its cash freed up by optimizing capital structure.

Now the company has more than 2 billion cash on its balance sheet. Capital reduction like F&N? Special dividend? Share buyback? Or M&A to squander it?

What's Indofood's goal for China Minzhong?

(14-02-2014, 01:46 PM)freedom Wrote: What's Indofood's goal for China Minzhong?

http://infopub.sgx.com/FileOpen/Press_Re...eID=255109

Quote:Indofood is confident that when completed, this offer will generate long-term financial and strategic value for both Indofood and
China Minzhong, given the attractive growth potential of Indonesia and China.

Acquisition Rationale and Potential Synergies

Indofood considers China Minzhong’s business to be strategically complementary to Indofood’s business and that various
opportunities exist for strategic integration and synergies, including:

• Introduction of industrialised farming in Indonesia utilising the expertise and resources of both China Minzhong and
Indofood, and potentially applying that expertise and those resources in other jurisdictions in Asia pursuant to a joint venture
model or other arrangements

• Supply of instant noodles seasoning pack ingredients and other raw materials by China Minzhong to Indofood and its
subsidiaries

• Potential sale and distribution of China Minzhong products in Indonesia, using Indofood’s extensive distribution network in
Indonesia

• Application of China Minzhong’s business model to certain of Indofood group’s business operations in Indonesia, in
particular to strengthen Indofood’s supply chain and expand its product portfolio

• Strategic cooperation in supply chain and product distribution in the markets of China and Indonesia



 Leveraging on Indofood’s strengths including financial, management knowledge, and expertise to further improve CMFC’s
operations

 Supporting CMFC’s future investment and expansion plans with Indofood’s financial backing and further enhancing CMFC’s
ability to tap debt & equity capital markets

 Enhancing CMFC’s financial performance by expanding CMFC’s international market presence to one of the fastest
growing economies, Indonesia, through:

 Leveraging on Indofood’s marketing expertise and distribution network for CMFC’s consumer branded products
 Knowledge transfer from Indofood to set up distribution network in China for CMFC to carry out vertical downstream
integration and capture a larger share of the food & agricultural value chain
 Expanding CMFC’s product portfolio by distributing and selling ICBP products

 Replicating CMFC’s business model on industrial and conventional farming in Indonesia

 Realization of strategic integration benefits and other synergies sought to be achieved by Indofood would be beneficial for
Indofood’s parent, First Pacific Company Limited (“First Pacific”)

Indofood believes its acquisition of a controlling interest in China Minzhong would be mutually beneficial to both Indofood and
China Minzhong and would accelerate China Minzhong’s growth and development by broadening China Minzhong’s exposure to
new and existing markets.

Commenting on the Offer, President Director and CEO of Indofood, Anthoni Salim said: “As a leading Total Food Solutions
company with operations in all stages of food manufacturing, China Minzhong’s integrated cultivation and processing capabilities
provides a strategic fit to our business development. We could leverage on their business model, technology and expertise to
strengthen our supply chain and expand our product portfolios. We believe that this strategic acquisition will be mutually
beneficial to both Indofood and China Minzhong.”

Indonesia, 4 September 2013

Another eratat.....

(14-02-2014, 04:44 PM)desmondxyz Wrote: Another eratat.....

why do you say that?

It doesn't make sense for China Minzhong to fake cash balances now that it's Indofood's subsidiary.

(14-02-2014, 04:48 PM)minimax Wrote:

(14-02-2014, 04:44 PM)desmondxyz Wrote: Another eratat.....

why do you say that?

It doesn't make sense for China Minzhong to fake cash balances now that it's Indofood's subsidiary.

Before stashing that $500milion to GO Minzhong, I suppose the Indonesian side would ve done a proper DD. That is a reasonable assumption.

China Minzhong's intrinsic value is between $3 to $4. A very undervalued stock.

Preconception of S-Chips, anything that is too cheap to be true, usually isn't true.

Vested, caveat emptor.

(14-02-2014, 04:51 PM)morten Wrote:

(14-02-2014, 04:48 PM)minimax Wrote:

(14-02-2014, 04:44 PM)desmondxyz Wrote: Another eratat.....

why do you say that?

It doesn't make sense for China Minzhong to fake cash balances now that it's Indofood's subsidiary.

Before stashing that $500milion to GO Minzhong, I suppose the Indonesian side would ve done a proper DD. That is a reasonable assumption.

What nonsense are you talking about? Indofood never had any access to CMZ's internal documents before they make the GO.

They rely solely on CMZ's audited FS to make the GO.

(14-02-2014, 04:56 PM)Wildreamz Wrote: Preconception of S-Chips, anything that is too cheap to be true, usually isn't true.

Vested, caveat emptor.

CMZ is currently trading at cash value. Basically one is getting CMZ's business for free.

Quote:What nonsense are you talking about? Indofood never had any access to CMZ's internal documents before they make the GO.

They rely solely on CMZ's audited FS to make the GO.

Quote:Confidence in CMFC

Indofood has taken all necessary steps to ensure that its investment in CMFC is prudent, including the conduct of due diligence
prior to its initial investment in February 2013. Indofood is confident that the due diligence that it conducted was sufficient to
provide comfort over its investment.

Following the allegations, till date, the auditors of CMFC have not withdrawn any of its audit opinion on CMFC’s past audited
financials.

In response to the recent allegations made against CMFC, Indofood has noted the detailed point-by-point rebuttals of the
allegations, released by CMFC on SGX on 1 September 2013 and 3 September 2013, where it has specifically addressed the
allegations in detail and has provided substantiation of facts. Indofood is satisfied with CMFC’s rebuttals of the allegations and
finds the rebuttals to be consistent with Indofood’s due diligence findings and analysis.

Despite the allegations, CMFC has remained transparent and open in their communication with the investor public, with clear
analysis and discussion of their operating performance in their results announcement even as it strives to prepare the first
rebuttal under intense time pressure. This is in line with Indofood’s policy of making timely disclosures to the investor public and
also indicative of CMFC and its management’s ability to operate and thrive under adverse conditions.

It is clear that the intention of the recent allegations is to benefit from the decline in CMFC’s share price as the issuer of the
malicious report has stated clearly that they maintain a short-sell in CMFC.

http://infopub.sgx.com/FileOpen/Press_Re...eID=255109

As far as I know, Indofood never stated in detail what does their due deligence comprises (site visits, internal audit, 3rd party valuator etc)

I don't think it is fair to make assumptions like that.