Multi-Chem

[weijian]

Full year result is out, the co declared S$0.177 full year dividend witch is more than 50% improvement from last year, hope we could enjoy many more years of good dividend to come.

The profit was affected by some of non controllable factors such Jobs Support Scheme and foreign exchange loss etc

FY21 may have been a high water mark (in profitability). Besides reduction in JSS and FX losses, the overall business's GP and higher costs have eroded profitability.

Boss Foo made a good move back in 2021, to use its existing cash hoard to increase M-TECH Spore's stake by 23.5% to become fully owned. Without this increased stake, profitability would have dropped close to 27% compared to the current 20% YoY.

The increase in dividend (coming from a base of low dividend payout ratio) was expected but I have to admit that the quantum was on the upper side of expectation. In all, VB BlueKelah has pretty good judgement of character I would say.

[xierwang]

Full year result is out, the co declared S$0.177 full year dividend witch is more than 50% improvement from last year, hope we could enjoy many more years of good dividend to come.

The profit was affected by some of non controllable factors such Jobs Support Scheme and foreign exchange loss etc

FY21 may have been a high water mark (in profitability). Besides reduction in JSS and FX losses, the overall business's GP and higher costs have eroded profitability.

Boss Foo made a good move back in 2021, to use its existing cash hoard to increase M-TECH Spore's stake by 23.5% to become fully owned. Without this increased stake, profitability would have dropped close to 27% compared to the current 20% YoY.

The increase in dividend (coming from a base of low dividend payout ratio) was expected but I have to admit that the quantum was on the upper side of expectation. In all, VB BlueKelah has pretty good judgement of character I would say.

Thanks Weijian for your insights.

Yes, FY2021 was an exception good year for the Co, So I use FY2020 earning as benchmark and zero profit grow rate for prejection, it gives me about S$2.4 intrinsic value which is closed to VB Bluekelah's valuation of S$2.2.

I am planning to attend this year's GM, hope I could meet up with some of VB brothers here.

<Vested, Core>

[weijian]

There are some good answers from the Chairman itself which gives IT dummies (OPMIs like me) a much better understanding of the business.

As for the question on the threat of cloud computing, the answer looks vague enough to suggest that cloud computing is a substitute and it is just waiting for the customers' behavior to change?

Minutes of the Annual General Meeting of the Company held at 18 Boon Lay Way, #04-110 Tradehub 21, Singapore 609966 on Friday, 21 April 2023 at 11.30 a.m

Question: Mr Y enquired if there is any advantage if the listed company is M.Tech instead of MultiChem.

Answer Mdm Han Juat Hoon shared there is sentimental value in the Multi-Chem name for the listed entity. In view of the business environment, it is important to improve business.

https://links.sgx.com/FileOpen/Multi-Che...eID=758865

[xierwang]

I asked the question regarding clould computing, the boss said he is not worry as the biz pie is getting bigger and their main customers are from Goverment and big enterprise Compaines, there are still strong demand on m-tech solutions from those sectors. then he qouted an example of clould computing customer addopted m-tech solution with less margin gained. Since there were small group of shareholders, I had the opportunity to ask most of my burning questions regarding the CO, I must say I am getting much better and positive view on the CO after the meeting.

Cheers

May the market force be with you!

[weijian]

I asked the question regarding clould computing, the boss said he is not worry as the biz pie is getting bigger and their main customers are from Goverment and big enterprise Compaines, there are still strong demand on m-tech solutions from those sectors. then he qouted an example of clould computing customer addopted m-tech solution with less margin gained. Since there were small group of shareholders, I had the opportunity to ask most of my burning questions regarding the CO, I must say I am getting much better and positive view on the CO after the meeting.

Cheers

May the market force be with you!

hi xierwang,

Thanks for asking the questions during AGM and helping ignorant OPMIs (like me) to reduce my ignorance!

I remember long time ago, i used to be dealing with hard tokens (RSA secureID). Then RSA secureID went into an app form and then in the last 2 years when cybersecurity took precedence with WFH, I noticed the entire security clearance (2 factor authentication and password clearance) were over sourced to Azure (Microsoft Cloud platform). This entire enterprise suite of services were definitely seamless IMO.

The business pie is always getting bigger but when one looks at how Microsoft's cloud computing business is growing even in the current downturn, I just wonder whose lunch is Microsoft eating up? Of course, the above is just my single anecdotal experience and there is probably more I need to learn with regards to my ignorance to this sector.

[xierwang]

Not specific to particular cloud platform, new technologies such as AI and autonomous vehicles etc demand more scalable computing services which are new demand and growth drivers for Cloud operators. Having said that, the fast adoption of cloud computing does implact on traditional on premises in-house IT infrastructure. Enterprise IT department has to strike a balance base on it's budget and criticality of data to make a proper plan acoordingly.

My 2 cents

[xierwang]

The company request for Trading Halt, wonder what is going on? the share price has been moving up after it posted good set of full year results, hope it is not a low bar offering.

[weijian]

hi xierwang,

In general, low bar offers don't come after generous dividends.

I suspect, this is going to end up more like "GK Goh" type than many others we have criticized against in this forum.

[weijian]

As a distributor, footing the "marketing/promo costs" for your vendor (or the brand principal/software company) is in the ordinary course of events. But the issue is probably in the manner it was done, which is not robust.

Nonetheless, that's a lot of CapitaLand vouchers - speaking volumes about the fungibility between such vouchers and cash.

UPDATE RELATING TO THE UTILISATION OF AN AMOUNT FOR MARKETING AND PROMOTIONAL EXPENSES

Company is currently in discussions with its statutory auditors, which is currently carrying out the statutory audit of the Company, regarding certain clarifications sought by the auditors relating to the utilisation by the Group of an amount of approximately US$1.6m, in 2023, towards marketing and promotional expenses.

The amount was ostensibly for the purposes of purchasing CapitaLand vouchers for marketing and promotional purposes on behalf of a vendor of the Group. The sum had been paid by the Company into the personal bank accounts of two employees of the Group, who then on-paid this money to one employee of the vendor.

https://links.sgx.com/FileOpen/Multichem...eID=793034

[xierwang]

This is a very bad practice indeed, make it very difficult to trace the final beneficial party after using personal bank accounts for official use.

Just hope the scale of damage is limited and the CO has placed proper control immediately.