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Intraco
20-04-2012, 05:32 AM, (This post was last modified: 23-10-2013, 03:13 PM by CityFarmer.)
Post: #1
Intraco
There should be some 'actions' for this counter today after the following report appear in the Hock Lock Siew section.

Not Vested

The Business Times
April 20, 2012

Intraco should return cash to shareholders
BYTEH HOOI LING PRINT |EMAIL THIS ARTICLE
NOT many companies listed on the Singapore Exchange have the history and pedigree of Intraco. In 1968, the Singapore government set up the $50-million trading company and tasked it to assist in the creation of export markets for locally manufactured products, the promotion of external trade and to source for competitively priced raw materials, commodities and manufactured goods for the domestic market.
Under its founding chairman Sim Kee Boon, Intraco went on to play a major role spearheading Singapore's counter-trade with the former Eastern European countries, the USSR, Africa and the Middle East. It was listed in 1972.

Controlling stake
The company, however, outlived its usefulness. In late 2003, mainboard-listed PSC Corporation became Intraco's new controlling shareholder after it bought a 29.9 per cent stake in the loss-incurring group from NatSteel, Temasek Holdings and DBS Bank for around $18 million.
Since PSC - itself controlled by Hong Kong asset trader Charles Chan - acquired a controlling stake in Intraco, the fortunes of the company have languished even further.
At the acquisition price of 62 cents a share back in 2003, which at that time represented a premium of 12.7 per cent over the last traded price of the counter, Intraco is today trading at about 28 cents. It was trading at a low of 18 cents earlier this year.
Since taking control over the company, the new management turned it around by disposing of unprofitable businesses. From a revenue of $395 million in 2004, Intraco's revenue more than halved to just $174.6 million in 2011.
The bulk of the revenues came from trading in industrial materials which include metals and minerals, plastics, petrochemicals and rubbers, energy commodities which include coal and biofuels, trading and processing of agricultural and food products and others include investment holdings.
Last year, it suffered a loss of $7.2 million due primarily to provision for doubtful receivables. About $1.5 million was from losses at its semiconductor business which has since been discontinued. Its executive chairman, Allan Yap, meanwhile, took home more than $500,000 in remuneration. Executive director Foo Der Rong was paid between $250,000 and $499,000.
On average, the net earnings of the company in the previous seven years were about $3 million.
Given its lacklustre performance in the last eight years, it is no wonder that Intraco has pretty much dropped out of the radar of most investors.
But the thing is, at its current market cap of $28 million, the market is valuing the company at less than the net cash of $44.2 million it has in the banks.
The net asset value of the group is 70 cents.
In the past eight years, the average cash and near cash items in its books averaged $36.5 million. In that period, we've seen asset prices plunge to extremely depressed levels. Those were great opportunities to pick up good assets and new businesses.

No clear plan
Yet the management has continued to hang on to the cash, preferring to put it in fixed deposits in banks. There doesn't appear to be any clear plan as to what it wants to do with the cash. At the same time, it has cut the dividend for last year to 0.3 cents, from one cent in 2010.
Intraco is having its annual general meeting next Wednesday. Its shareholders might want to take the opportunity to query the management on what it plans to do with the money.
If it can't put the money into good use, then undoubtedly its long-suffering shareholders would find returning the cash to them a welcome move.

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20-04-2012, 10:04 AM,
Post: #2
RE: Intraco Limited
Intraco made its fortunes via Rotraco, a 49% JV with Rothmans of Pall Mall. The JV was announced in the Straits Times on 1 Feb 1973. Rotraco imported cigarettes from Rothmans in the UK, for local duty-free sale (at the airport) and for re-export. It was extremely profitable, but after the government adopted an anti-smoking stance, this became politically untenable, and Intraco sold its stake.

After that, Intraco was doing things like importing rice, which of course does not have the same profit margins.

As for a return of cash, minority shareholders' best hope may be to embarrass the controlling shareholders or the board. The latter was in fact successfully done with Lion Asiapac, because at least two of the independent directors were public/semi-public figures, viz:

Sam Chong Keen, formerly from the Admin Service and NTUC
Wong See Meng, formerly at DBS and ORIX

Mr Wong resigned in Sep 2010. Mr Sam is still on the board.

How "embarrassable" is Intraco's board?

There is one obvious target:

Dr Tan Boon Wan
- former MP for Ang Mo Kio GRC (9 years)
- recipient of Public Service Medal (PBM) in 1993

An appeal can be made to Dr Tan in private, failing which the press could be helpful. Especially the BT reporter who covered the Lion Asianpac saga.

Other targets for activists would include the independent directors at PSC, among them:

Mr Chee Teck Kwong Patrick
- Vice-Chairman of Teck Ghee CC
- Organizing Chairman of National Street Soccer League
- Recipient of Public Service Medal (PBM) in 2003

Potential/Current activists should keep in mind that the pen is mightier than the sword. Being openly combative gets you nowhere, as Pope Asset Management and Laxey Partners have found with Kingboard Copperfoil and UIS respectively.

As usual, YMMV.
---
I do not give stock tips. So please do not ask, because you shall not receive.

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20-04-2012, 11:04 AM,
Post: #3
RE: Intraco Limited
For LAP, I think the Chairman, Mr Othman Wok (former minister & MP), might have played a bigger role than those listed. Of course, having a ex-journalist (Mano Sabnani) in the rank of shareholders helps too.

For activists, it's not too difficult to get journalists to help you. They want stories (backed with facts, of course) to write. U help them do their job, and they'll help u. I've personally tried.

Still, it's so much easier to be an opportunist... & hitch a ride with the activist Wink

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20-04-2012, 12:30 PM,
Post: #4
RE: Intraco Limited
bluechipstamp Wrote:For LAP, I think the Chairman, Mr Othman Wok (former minister & MP), might have played a bigger role than those listed.

Oh yes. I completely missed Mr Wok. Silly me. Yes, his visibility (and thus exposure to embarrassment) would have been an important factor.

bluechipstamp Wrote:Of course, having a ex-journalist (Mano Sabnani) in the rank of shareholders helps too.

IMHO it is better to work with journalists who are still writing. Got to be prepared to spoonfeed them though - they have many things on their plate, and their investment knowledge (with the possible exception of Teh Hooi Ling) can be spotty at best.

They have a deadline to meet, so it's best to do all the legwork for them, so that they have all the key points in front of them and only need to write a few connecting sentences to string the whole thing together.

It's win-win: the journalist gets credit for an interesting story with hard facts backing it up, and the activist gains a platform to apply public pressure on uncooperative companies.
---
I do not give stock tips. So please do not ask, because you shall not receive.

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20-04-2012, 01:58 PM, (This post was last modified: 20-04-2012, 02:41 PM by freedom.)
Post: #5
RE: Intraco Limited
for a loss-making companies, the executive directors certainly got good remuneration, nearly a million.

more details about executive directors' remuneration:

2011:
profit: -7,164,000

Dr. Allan Yap $500,000 and above
Mr. Foo Der Rong $250,000 to 499,999

under related parties,
short term employee benefit
Directors’ remuneration: 912,000

2010:
profit: 378,000

Dr. Allan Yap $500,000 and above
Mr. Foo Der Rong $250,000 to 499,999

under related parties,
short term employee benefit
Directors’ remuneration: 860,000

2009:
profit: 3,105,000

Dr. Allan Yap $250,000 to 499,999
Mr. Foo Der Rong below $250,000

under related parties,
short term employee benefit
Directors’ remuneration: 860,000

2008:
prrofit: 1,189,000

Dr. Allan Yap $250,000 to 499,999
Mr. Foo Der Rong below $250,000

under related parties,
short term employee benefit
Directors’ remuneration: 600,000

2007:
profit: 3,777,000

Dr. Allan Yap $250,000 to 499,999
Mr. Foo Der Rong below $250,000

under related parties,
short term employee benefit
Directors’ remuneration: 790,000

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20-04-2012, 03:04 PM,
Post: #6
RE: Intraco Limited
SEE PSC CORP

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20-04-2012, 03:43 PM, (This post was last modified: 20-04-2012, 03:43 PM by yeokiwi.)
Post: #7
RE: Intraco Limited
Quote:If it can't put the money into good use, then undoubtedly its long-suffering shareholders would find returning the cash to them a welcome move.

This is a classic value trap. I actually owned this stock few years ago for a period of time but had divested away due to the poor management. If the management interest does not align with the shareholders, it will take a long time for the long-suffering shareholders to see the daylight.

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20-04-2012, 03:46 PM, (This post was last modified: 20-04-2012, 03:48 PM by freedom.)
Post: #8
RE: Intraco Limited
(20-04-2012, 03:43 PM)yeokiwi Wrote:
Quote:If it can't put the money into good use, then undoubtedly its long-suffering shareholders would find returning the cash to them a welcome move.

This is a classic value trap. I actually owned this stock few years ago for a period of time but had divested away due to the poor management. If the management interest does not align with the shareholders, it will take a long time for the long-suffering shareholders to see the daylight.


SGX really lacks of shareholder activists. Otherwise, shareholder activists might take this opportunity to vote out Allan Yap in the coming AGM or enough votes against Allan Yap to show the dissatisfaction of shareholders.

Smile

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20-04-2012, 04:11 PM,
Post: #9
RE: Intraco Limited
freedom Wrote:SGX really lacks of shareholder activists. Otherwise, shareholder activists might take this opportunity to vote out Allan Yap in the coming AGM.

It is important to focus only on "do-able" deals. One of the things to do is ensuring that there are no hostile blocks of stock. In the case of Intraco, PSC calls the shots with a 30% block amid fragmented holdings. Who calls the shots at PSC?

Ku Yun-Sen 24%
Allan Yap & Tang Cheuk Chee (husband and wife) 17%
Goi Seng Hui 12%

So it would seem that removing Allan and his wife from Intraco would require the co-operation of both Ku Yun-Sen and Goi Seng Hui at PSC.

In short, removing Allan and his wife is not really a "do-able" deal for an activist unless he/she is already trusted by Ku and Goi. Embarrassing Patrick Chee, on the other hand looks far easier, and potentially do-able. After all, Patrick is on the board, and directors are appointed by shareholders to hire appropriate management to produce satisfactory results.

The results of the last 5 years can hardly be considered acceptable, which calls into question whether the board has done right by shareholders. Of course, embarrassing Patrick could force him into resigning without any accompanying action from Intraco itself. That is one possible outcome.
---
I do not give stock tips. So please do not ask, because you shall not receive.

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20-04-2012, 05:03 PM,
Post: #10
RE: Intraco Limited
to remove Dr. Allan Yap or any other executive directors from Intraco is tough either through directly voting out or embarrassing Patrick Chee. But shareholders should urge the remuneration committee review the service contracts of executive directors based on performance and condition of the company and nominating committee to review the performance of executive directors in the last few years.

The timing of the business time article is very interesting. Anyone who buys share today probably will not be entitled to attend the AGM held on April 25th, 2012 as CDP requires 3 days to deposit the share, which is on April 25th, 2012.

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