Viz Branz

[lonewolf]

So what does it say about a company when its Investor Relations dun bothers to update the website; and when they issue a statement, they din even spot their own inconsistency.

Not vested. I'm just been cheeky with my comments. A lot of companies has non-existent IR and even more terrible company secretary. Of course, that by itself makes it a bad company or not worth investing in. But such a terrible public image cannot be good for a listed company. Agree??

A bit OT, I commented previously that some Board of Directors' are so publicity shy that they dun even publish a photo of themselves. Closer scrutiny reveals that the same publicity-shy directors are hemming a company that is not doing well. Hence maybe not having their photos is a self-preservation against disgruntled shareholders who may want to do some bodily harm to them.

[pianist]

i am vested at 0.171 at the moment and take a interest in this issue.
how does a writ of summons works? will there be hearing opened to the public in the high court and how to find out the schedule?

[MrValue]

I believe Ben's shareholding is considered together w his father's shareholding which together exceeded 50% since years ago.

Since we now know that father and son have fallen out, guess we then cannot consider that they are acting as a concerted party.

So will Benr chng be subjected to the takeover rules then?
=>He can no longer increase his stake without triggering GO?
and Guess they were already not acting as a concerted party when Ben increase his stake by over 1% in Oct. How will the rules apply then?

[8percentpa]

Who has an idea what the reason behind the unfavourable inventory development of Viz Branz could be?

Here are the numbers.

inventory turnover the latest 12 months per

2. half 2007: 6,6
1. half 2008: 5,9
2. half 2008: 5,4
1. half 2009: 4,9
2. half 2009: 4,1
1. half 2010: 3,9
2. half 2010: 3,9

or similarily inventory to revenue of latest 12 months in per cent

2. half 2007: 10,1
1. half 2008: 11,5
2. half 2008: 14,8
1. half 2009: 15,2
2. half 2009: 15,6
1. half 2010: 16,7
2. half 2010: 18,1

The installment of the creamer facilities can't be a sufficient explanation, as this effect should have been vanished a year ago.

Has anybody experiences with Viz Branz referring the provision on information of this type when asked. Who was the contacted person and how was it done (e-mail, phone ...).

WEB-CM

Apparently there is no Investor Relations so it might be quite difficult to get answers from the co. But no harm trying I guess. Just go to the website, get the phone no. and give them a call.

Pertaining to your questions, I took a look at Super Coffeemix and Food Empire's inventory as well. It seems to fluctuate between 10-20% ( I just looked at 2 or 3 data points though), so perhaps we should be alarmed if it goes to 40-50% of sales.

Although I do agree that such a consistent trend of increasing inventory is not a good sign. Do hope you get through to the co. and update us ok?

[julianbream]

Hi dydx,

Do you have any view on the matter of the shareholding dispute between father and son? Greatly interested to know what your take/ interpretation is, especially on the impact on the company going forward. Vested.

[dydx]

It is always sad to read about family members suing one another over some valuable assets or money.

In this case, Chng Khoon Peng (the father) is suing Ben Chng Beng Beng (the son) over the ownership of an approx. 19% equity interest - or some 67.5m shares - in Viz Branz presently held by Ben Chng.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
Based on the last done price of $0.295, the Viz Branz shares involved have a current market value of close to $20.0m - not a small sum for either Senior Chng or Ben Chng.

We do not have confirmation on whether the disputed shares were owned by Senior Chng only, or involved also his deceased wife; if so, there could be further complications, as it would involve the deceased's estate and perhaps also potential estate duties. What ever it is, the dispute appears to be involving an event in the past which the 2 could not resolve until now.

I guess lawyers involved in such family dispute cases would try to advocate both sides to use the court mediation process or an out-of-court settlement. So an all-out fight in the open court - it may lead to showing dirty laundries within the Chng family to the world! - may not just happen.

Based on their latest filings, Senior Chng's interest in Viz Branz now stands at 23.2419%; and Ben Chng's interest at 50.0357%.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Senior Chng]
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Ben Chng]
If Senior Chng eventually prevails over Ben Chng in the dispute, a transfer of a 19% interest back to Senior Chng will make him the largest shareholder with 42.2419%, and Ben Chng's interest will fall to 31.0357%. But for such cases anything could happen in the end, and (if Ben Chng loses) the settlement could involve just a payment, and not a transfer of the said shares.

As this is really a private dispute between 2 shareholders, technically Viz Branz is not involved in the suit, and it should not just affect Viz Branz's business operation. This has been clearly metioned in Viz Branz's announcement, presumably made only after due consideration by the independent directors with advice from the company's lawyers.

I think it is more interesting to think about the real motivation(s) behind Ben Chng's aggressively buying more Viz Branz shares from the open-market in the last few years. By his action, there is no doubt Ben Chng sees a lot of value in Viz Branz's business; but rationally speaking, the man ought to be also thinking about an exit plan for his additional investment in the company bought at market prices.

[julianbream]

Hi dydx,

Thank you for sharing your views. Despite Viz Branz reaching and exceeding my target price of 60 cents (i.e. 30 cents, post share-split), I chose not to sell, inferring more value from Ben Chng’s aggressive purchases at 30 cents and more. What gave me confidence was the fact that he’s an (important) insider and he was obviously seeing value (at 30 cents and more), as you mentioned.

The dispute between father and son threw a spanner in the works because it prompted me to ask, “could there have been other reasons why Ben Chng bought so aggressively?” and all sorts of possible (remote and not so remote reasons started springing up in my mind).

Another issue was: even if the dispute is a private one and doesn’t concern the company directly, one can’t help imagining the indirect impact it would have on management and morale since we’re talking about two important directors here.

At the end of the day, I’m weighing the pros and cons of the whole matter and will take a decision based on your and other views. Thanks a lot. Your input is most valuable and appreciated.

[dydx]

julianbream,

Your target price appears too low. Shareholders who choose to sell now will probably end up selling cheap into the hands of Ben Chng!

The dispute between the father and son has to end eventually. They ought to know very well that it is not good for the image of the company and themselves. Senior chng's decision to sue could be driven by a spur-of-the-moment anger. It is always possible that a father-and-son dispute can be quite easily resolved by either side saying sorry to the other over a cup of Chinese tea (or perhaps a cup of Kopi O in this case!). The Chng's are Chinese educated, and should have "blood is thicker than water" behind in the minds as well.

We can also reasonably expect the other directors to play a mediator role and make sure that the dispute does not affect work at the BOD level, and also take necessary actions to avoid the dispute to affect the morale of the professional managers and supervisors in their daily work. As Viz Branz's business operation is already well-established, demand for the company's products is mainly driven by consumers' regular purchases and re-ordering by the retail outlets, supported by the company's on-going A&P efforts.

For the sake of discussion, what if Ben Chng's aggressive open-market share purchases is driven by his untold plan to want to sell his controlling stake to another F&B group involved or interested in FMCG - e.g. YHS, F&N, etc. - at an attractive price; and perhaps, Senior Chng at this point is not quite ready to support such an idea. One thing is real - a well-run, profitable and valuable business has many possibilities!

[VestedInterest]

This saga reminds us of the case concerning the founder of Malaysia Dairy Industries, that produce Marigold products, Vitagen and HL milk. There was some family dispute and the founder Chairman was removed by his family members. All for overcharging $45 000 in the company's accounts. Probably more than meets the eye. And what happened to their products after the saga ended. Nothing! We still buy Vitagen and HL milk. And my neighbour too.

[julianbream]

julianbream,

Your target price appears too low. Shareholders who choose to sell now will probably end up selling cheap into the hands of Ben Chng!

The dispute between the father and son has to end eventually. They ought to know very well that it is not good for the image of the company and themselves. Senior chng's decision to sue could be driven by a spur-of-the-moment anger. It is always possible that a father-and-son dispute can be quite easily resolved by either side saying sorry to the other over a cup of Chinese tea (or perhaps a cup of Kopi O in this case!). The Chng's are Chinese educated, and should have "blood is thicker than water" behind in the minds as well.

We can also reasonably expect the other directors to play a mediator role and make sure that the dispute does not affect work at the BOD level, and also take necessary actions to avoid the dispute to affect the morale of the professional managers and supervisors in their daily work. As Viz Branz's business operation is already well-established, demand for the company's products is mainly driven by consumers' regular purchases and re-ordering by the retail outlets, supported by the company's on-going A&P efforts.

For the sake of discussion, what if Ben Chng's aggressive open-market share purchases is driven by his untold plan to want to sell his controlling stake to another F&B group involved or interested in FMCG - e.g. YHS, F&N, etc. - at an attractive price; and perhaps, Senior Chng at this point is not quite ready to support such an idea. One thing is real - a well-run, profitable and valuable business has many possibilities!

dydx,

I understand that in a trade sale situation, we can be looking at the company being sold for a substantial premium price that’s much higher than 30cents per share. In the meantime, market forces seem to have settle on 30 cents, slightly less or slightly more.

If I can accept that Ben Chng’s purchases are not a case of reverse psychology – and it seems highly unlikely that he would expend millions of dollars (borrowed or otherwise) to buy something worth $1 for $1.50 – then I guess whatever his detailed rationale/ intentions behind the purchases, I can have faith that they essentially signal something positive about the company, indicating a probable future value of much more than 30 cents per share.

If, however, one also accepts that the emergence of a father-son dispute is something essentially something negative for the company, then one needs to weigh the aforementioned positive point against this negative point.

I really do hope though that this dispute (i) ends and (ii) doesn’t inflict real lasting damage on the company.