Tat Seng Packaging AGM 2018

I was 30 mins late for the AGM, held at Hanwell Holdings. Remembered the wrong time. A small AGM, nothing exciting. I think there is less than 30 people attended. I will write about the things I can remember or interesting. I find Mr Loh, the CEO to be very sincere as he answer questions from the shareholders after the AGM.

1. Why dividend is cut? Is there a cash flow problem?

The board said that they are embarking on a new investment. Hence they need the cash for it, so they decided to have some reduction.

Probably the acquisition of Nantong Plant.

2. What is the reason from the better performance for 2017?

This is due to better selling price and new customers but mainly from higher selling price.

3. Will the price of Tat Seng's products fall?

Due to volatility of raw material price. and competition in china, the management always try to improve their productivity, enhance efficiency and manage of cost. They will try very hard to get better return for the shareholders for the future.

4. What is the plant utilization rate in China?

The Board said this is sensitive information. Told us not to worry, they know they are utilizing properly. The fact that they upgrade their machine show that there would be bigger volume due to higher demand.

5. Is Singapore operation profitable?

Singapore operation has improved but the loss is due to corporate cost of the corporate office located in Singapore.

6. Regarding illegal discharge to public sewer. 

The incident happened in 2016 and earlier. The recent report is dug out by the press, it did not happened this year. New equipment was installed to resolved the issue and has engage Singapore test service pte ltd to inspect/test for the past 2 months and had met the regulation standard. They said they are caught off guard by the change in Singapore environmental regulation.

7. Does the plant in China face the same issue regarding the illegal discharge?

No issue in China. China requirement is less stringent than Singapore as Singapore has a much higher standard due to NEWwater.

Interesting Facts

• Raw material price is highly volatile.
• Raw material paper pulp up > 25% since 2016 Sept.
• Request a readjustment in price with customer if raw material increase more than 10%.
• Not fair game in china where contract might not be honor, if customer reject the increase in price, they can find another company.
• Logistic is very important. Require 100 trucks to delivery goods. Thus has to pay the worker well.
• Once deliveries are done, the next delivery will be prepared. Logistic will just pick up and go, hence no wait time, increase efficiency. 
• Cost of workers are keep below 10% and are confident to remain stable.
• Cost of workers has increase but volume of sale has mitigated with even higher sales volume.
• Plants are run 24hrs, which allow a huge capacity from Tat Seng. Few (20%) of competitor can do so.
• There are about 5000 competitors in china.
• China has tighten regulation, more inspections. This level the playing field. Companies that ignore the capex to meet the requirement will be force to spend. This also weed out weaker companies.
• Has the big capacity to handle eCommerce demand on special days like the 11.11 single day. 
• Plants that are invested with money from Singapore is consider a Singapore company. Whereas plant invested by money make from Singapore company in china is consider a china company.
• Impairment is due to fair value change of raw material
• China private investors are GM in company.
• China top customer contribute between  5% to 10% of revenue.
• R&D is important. If they can reduce amount of raw material used for the same product. This will save on cost.

Food

Good thing about a small AGM.  No body rush in to eat or da bao. Everything is very causal. Food by Neo garden. Best bee hoon so far I had eaten from a caterer.