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17-03-2011, 03:57 PM
Just finished reviewing the FY10 (ended 31Dec10) full-year AR.....
http://info.sgx.com/webcoranncatth.nsf/V...10035CF77/$file/FullYearResultAnnouncement20101231.pdf?openelement
Tat Seng's PRC operations - comprising 3 full-fledged corrugated packaging plants in Suzhou, Hefei, and Nantong - have chalked up a very impressive increase in business volume and revenue in the last 3 FYs. Profitability, however, has not increased in tandem, mainly due to a rise in raw material prices in FY10, and partly and possibly due to the additional expenses linked to the acquisitions and fast expansion of production capacity, as well as the use of competitive pricing to penetrade new customers.
Operating FCF has remained very decent and sufficient to fund the acquisitions and most of the capacity expansion capex. The increased working capital is mainly funded by trade credit from suppliers and local bank borrowings in PRC.
Based on the pattern of the last 3 FYs, I suppose we can reasonably expect Tat Seng to pay an Interim dividend in coming Aug11 (last FY10: $0.01/share Interim dividend was paid on 26Aug10).
2 relevant questions: Is there good investment value in a well-established and growing basic paper-packaging business in PRC? If so, what should it be?
Based on the 157.2m issued shares (as at 31Dec10) and the last done share price of $0.20 (on 11Mar11), Tat Seng's market cap. now stands at only $31.44m. This is equivalent to only 20.5% of FY10's revenue of $153.3m, or a historical PER of 5.05x on FY10's NP of $6.23m, or 2.33x of FY10's operating FCF (before changes in working capital items) of $13.1m. Quite obviously, Tat Seng appears to be yet another grossly under-priced situation!
It will be good if other forumers could also share your views.
http://info.sgx.com/webcoranncatth.nsf/V...10035CF77/$file/FullYearResultAnnouncement20101231.pdf?openelement
Tat Seng's PRC operations - comprising 3 full-fledged corrugated packaging plants in Suzhou, Hefei, and Nantong - have chalked up a very impressive increase in business volume and revenue in the last 3 FYs. Profitability, however, has not increased in tandem, mainly due to a rise in raw material prices in FY10, and partly and possibly due to the additional expenses linked to the acquisitions and fast expansion of production capacity, as well as the use of competitive pricing to penetrade new customers.
Operating FCF has remained very decent and sufficient to fund the acquisitions and most of the capacity expansion capex. The increased working capital is mainly funded by trade credit from suppliers and local bank borrowings in PRC.
Based on the pattern of the last 3 FYs, I suppose we can reasonably expect Tat Seng to pay an Interim dividend in coming Aug11 (last FY10: $0.01/share Interim dividend was paid on 26Aug10).
2 relevant questions: Is there good investment value in a well-established and growing basic paper-packaging business in PRC? If so, what should it be?
Based on the 157.2m issued shares (as at 31Dec10) and the last done share price of $0.20 (on 11Mar11), Tat Seng's market cap. now stands at only $31.44m. This is equivalent to only 20.5% of FY10's revenue of $153.3m, or a historical PER of 5.05x on FY10's NP of $6.23m, or 2.33x of FY10's operating FCF (before changes in working capital items) of $13.1m. Quite obviously, Tat Seng appears to be yet another grossly under-priced situation!
It will be good if other forumers could also share your views.