Tat Seng Packaging

[d.o.g.]

Tat Seng, on the other hand, is merely a producer of corrugated paper boxes and related packaging products/solutions selling to end industrial customerss, including many prime-name MNCs and OEMs of a wide-range of consumer goods.

I stand corrected. It would seem Tat Seng is a customer rather than a competitor to the cardboard manufacturers.

The production equipment required - corrugating, printing, die-cut and finishing machines - are not very high-cost items.

Therefore the low entry barrier remains a problem.

A large and well-established base of prime-name customers acquired over time is a valuable asset for such kind of business.

the use of competitive pricing to penetrade new customers.

If Tat Seng can get new customers by pricing cheaply, it follows that competitors can do the same to Tat Seng. It also means that price rather than quality is the main concern for customers, not a good omen for profitability.

chances are that Loh may look for a good-enough trade buyer for the entire Tat Seng group at a good-enough exit price for him and PSC. This possibility should not be ruled out at all. For all his efforts growing Tat Seng's presence and business in PRC to the present scale in the last few years, Loh deserves a fair reward and a decent return on his stake in Tat Seng.

I am not saying a trade sale is impossible. I am simply saying that it is easier for Loh to sell his stake to PSC than to engineer a trade sale, and that if he succeeds in selling to PSC, minorities are not guaranteed to get the same deal.