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Let me explain what might be the reason TGIB decided to dispose (privatize) STGT.
I think this is because currently the F&B business value is locked when is merged with the plastic business, commanding a PE of mere 7, when other F&B business can easily fetch a PE of 15-25.
Instead of letting the F&B business value locked in the plastic business (TGIB), might as well unlock its value by disposing (privatize) it and distributing special dividend for shareholders, this is good for both retail investors and the board of directors of TGIB.
can I know the announcement about the sale of FnB mentioned by you
few years ago I spoke to Alvin Ang personally on this when I proposed spin off and then separate listing of FnB either via organic listing or rto of a shell co
I am under the impression that sale is quite unlikely
spin off and separate listing to unlock value yeah this is highly possible
Nah ! F&B only contributed 10% of total annual sales. The profit is very small.
They had been in F&B business since day 1 doing this business. If can do big, early early do big already
要注意的是，after no more F&B contribution, the eps and book value will reduce, then the PE and PB will be high. It might affecting the share price to revise, if it's core business can't give an investor confidence of growing.
From a strategic perspective, this disposal aligns with TGUAN's long-term focus on the plastic packaging. The F&B segment, though profitable, was a legacy business of the Ang family and has been a relatively minor contributor which is now being monetized. The one-off gain of RM15.43m enhances TGUAN's net asset base, while the cash proceeds improve financial flexibility. The decision to channel part of the proceeds as a special dividend provides immediate value to shareholders, while the remainde
based on my MnA experience, although the proceed and part of proceed has been converted to dividend of 7 cents sounds good, but in actual business world, if I am a buyer I will tend to pay less
to me a payment of dividends of 7 cents equivalent to near to 4 year profit from FnB might be too prudent , it might be more
in MnA transaction, all buyer wanted lower price but higher value and otherwise for seller
I have been seller and buyer side, so to me I am not very convinced for this MnA
you are right. but now the buyer and seller are all of the same interest. 60m at least is still in an acceptable range. but actually this sales precede is generating around 0.13 dividend. just decide to pay out from half of the disposal amount. for shareholder point of view, I hope this direction is really good for everyone.
I’ll throw the ball from another angle. The way I see it, tguan is disposing a business they’ve been trying to bring up for many years but to no avail.
They say it’s not only about the management capability, the industry one is in literally determines the fate of the company. In this context, tguan probably realized being in property development can yield better earnings than an f&b business. Hence they are now pivoting into property sector, following the path of scientex.
For good and for bad, I think this move will allow tguan to lay its foundation to achieve its 2b revenue goal by 2027.
Here’s a summary of Tguan’s recent developments and outlook in English:
Core Business and Focus
1. Main Business
• The company’s primary focus is producing stretch film, which accounts for nearly half of its business.
• Other operations include manufacturing food packaging, industrial packaging, courier bags, and exporting garbage bags to Japan. They also produce 888-brand tea, coffee, and noodles.
2. Production and Expansion
• Two new production lines for stretch film were installed last year and are now operational, with an overall utilization rate of 60%.
• The company emphasizes quality over quantity, as higher production doesn’t yield good profit margins compared to competitors like Scientex.
• Development in Myanmar has been halted due to geopolitical tensions.
3. Market Strategy
• US Market: The company has deployed a sales team, a sales point, and a warehouse in the US to offer after-sales service and educate customers on proper product use.
• Demand Trends: Demand for food packaging, industrial goods packaging, and courier bags remains steady, with small domestic growth and stable foreign demand.
Financial Overview
1. Bad Debt and Impairment
• In Q4 last year, the company reported RM10 million in bad debt impairment due to a customer’s long-standing payment delays during the MCO (Movement Control Order).
• However, the customer has a repayment plan to settle the debt over the next 4 years, and there’s potential for the impairment to be reversed.
2. Raw Material Costs
• The prices of raw materials (e.g., naphtha, PE, PP) are stable and relatively low, enabling the company to stockpile inventory in Q3 and Q4.
• Low material costs, coupled with a favorable USD exchange rate, may help maintain or improve profit margins.
New Business Initiatives
1. Real Estate Development
• The company is venturing into real estate, developing 200 shop lots next to a LAGENDA housing project.
• This initiative aims to create a complete township, with Phase 1 constructing 60 shop lots.
• Expected profit margins are in the double digits, with strong interest and confidence in selling out the units.
Outlook
1. Growth Expectations
• Q1 growth was satisfactory, but Q2 showed some slowdown, and overall growth for the year may not meet high expectations.
• However, profit margins have room for improvement due to lower raw material costs and exchange rate benefits.
2. Strategic Positioning
• The company is focusing on stable business growth rather than aggressive expansion.
• While valuations remain low, Tguan offers a steady business model but investors should moderate their growth expectations.
Conclusion
Tguan is in a stable phase, prioritizing quality in its core operations while cautiously exploring new opportunities such as real estate. Despite slower growth in the current economic environment, the company’s strong fundamentals, cost control, and diversification strategy provide a solid foundation. While short-term growth may be modest, its low valuation and prudent approach make it a promising candidate for long-term potential.
Share price won’t move due to reasons:
1. Company to dispose F&B portion to gain some capital to invest. Why? Short of cash on hand?
2. Earning per share will drop without contribution from F&B portion. Can plastics portion business to overcome this on coming quarters?