New Toyo

[Curiousparty]

Regular dividends had already been paid pre-BAT period.

Exactly, you hit it on the nail!!
To sustain the new BAT business back in 2008, New Toyo and Tien Wah had to do rights issue!!

This had "diluted" the potential shareholder value created from the new BAT contract, a point often omitted by many investors when they consider the investment merit of New Toyo. On a net basis, the average shareholder had not gained much from the BAT contract.

As an outsider investor, u have no basis and information to estimate/track/monitor the printing volume and cost of production of New Toyo or Tien Wah. When u cannot track a company's performance from outside easily, then it is much easier for management to take u for a ride (IMHO).

let me ask you. Do u know:-
a. what is the printing volume for a typical factory at Tien Wah?
b. how many cartons can a printer print?
c. How many hours does it operate per day? (knowledge of this item will be useful to estimate the downtown due to e.g. riots in Vietnam, etc)
d. What is the buffer capacity?

In fact, this is one of the greatest risks (i.e. lack of visibility). All u know is that every quarter, the company just kept telling u motherhood statements like "market conditions are challenging, etc"

Given the declining printing volume from BAT in the last few quarters, Tien Wah now might become more of a liability than asset to New Toyo.
(once u lose the economies of scale from the drop in printing volume, your profit margin will decline sharply as had been seen in Tien Wah results in recent quarters)

Tien Wah had been outright pessimistic in its recent few quarters of financial results. Given the recent riots in Vietnam, the PCL printing volume and revenue might hit another further big hit.

Let's wait for the Q2 results and see.

Hopefully New Toyo new management doesn't try something silly like the tissue paper business which destroyed shareholder value of at least 20 cents EPS (back in 2000~2001).

Aiya,

U still haven't see broken on Toyo meh...

At least they still pay decent dividends on top of milking the company for admin and directors' salary. Not so bad lah...

GG

Before the BAT contract, New Toyo equity was around $100mil. After gaining control of BAT contract equity increased to around $160mil (up to today). A 60% jump. But there is a CATCH.

Equity per share or roughly NAV has remained the same pre and post BAT contract.
Pre-BAT contract
2005 - 35.34 cents
2006 - 34.61 cents
2007 - 38.90 cents
Pre-BAT contract, Ave NAV = 36.3 cents

fast forward (post- BAT contract)
2011 - 36.49 cents
2012 - 36.57 cents
2013 - 35.64 cents
Post-BAT contract, Ave NAV = 36.2 cents


Based on NAV, there is in fact NO shareholder value creation from the BAT contract (IMHO).

Curiousparty
 
You have left out two important points.
New Toyo has been paying regular dividends and a special dividend.
A 2 for 5 rights issue at 12c lowered NAV.
What will be your conlusion?