Posted by tsurukame > 2013-11-23 11:16 | Report Abuse

I am not an investor of Tien Wah but this thread somehow piqued my interest...kcchonnz had done terrific work on determining the intrinsic value of Tienwah based on reported figures and most of i3 participants here would have learnt if they had taken the effort to do so...

The intrinsic value approach relies on past reported financial figures...of course if one knows the biz very well and can see its future biz very well ... one can use DCF( on FCF) basis to arrive at NPV of the business and that is assuming that past success factors will guarantee future success...but this may not be true in every case though.

I do not know anything about Tien Wah but I heard that they had opened up a factory in Vietnam...what will its future biz be in Vietnam??
Moreover AMVIG is doing well in China but then again CHINA is comprise of so many provinces where each province is very large in land mass and each province is actually a "country" bigger than other small countries outside China . So what is the biz potential of AMVIG going forward.....Doing biz in China is rather complicated...one can be successful in one area but a disaster in another as Past success factor DOES NOT GUARANTEE FUTURE SUCCESS...

Posted by houseofordos > 2013-11-23 12:09 | Report Abuse

Posted by Robert Love > Nov 23, 2013 09:02 AM | Report Abuse

A good comparator for Tien Wah is Amvig (listed in Hong Kong).

a. Amvig gross profit margin is the region of 30% while that for Tien Wah is barely 20%.
I DONT THINK THIS IS BIG ISSUE.IMPORTANT THING IS THAT IT IS TRANSLATING ITS EARNINGS INTO FREE CASHFLOW. NOT SAYING AMVIG IS BAD THOUGH.

b. Amvig is constantly undertaking printing capacity expansion for future growth while Tien Wah has already stopped installing new capacity since 2011. This is because demand for Tien Wah’s printing has already stagnated while Amvig is still growing its market share in China.
PRINTINIG CAPACITY EXPANSION DOESNT ALWAYS TRANSLATE TO FUTURE GROWTH. WHAT IF DEMAND DROPS, THEN THERE WILL BE UNDER-UTILIZATION AND HIGHER OPERATING COSTS. WELL AFTER THE BIG EXPANSION IN 2011, TIEN WAH IS FOCUSSING TO PARE DOWN ITS DEBT. ITS D/E RATIO IS STEADILY DECREASING FROM 0.93 IN 2009 TO 0.2 IN THE LATEST QUARTERLY REPORT. AT THE SAME TIME IT IS ABLE TO PAY DECENT DIVIDENDS. IT CAN ONLY DO THIS THROUGH ITS ABUNDANT FREE CASHFLOWS.

c. With much better GPM than Tien Wah, Amvig’s P/E is only 8. Should Tien Wah trade above this P/E level? I think not likely. If I am investor, I would rather buy Amvig than Tien Wah. Amcor has a big stake in Amvig but sold off its stake in Tien Wah many years ago.
AGAIN, YOU RE ONLY FOCUSSING ON 1 ASPECT IN THE COMPARISON. IS TIEN WAH AND AMVIG HAVING THE SAME MARKET CAP, WHAT ABOUT ITS DEBTS ? A COMPANY WITH HIGH DEBTS CAN LOOK CHEAP FROM P/E STANDPOINT IF ITS GENERATING MOST OF ITS EARNINGS USING DEBT.

Posted by Robert Love > 2013-11-23 12:10 | Report Abuse

We all know that doing business in China is very competitive, and yet Amvig is able to extract much higher gross profit margin than Tien Wah (30% versus 20% or 50% much higher for case of Amvig).

What does this tell us about the level of productivity of Amvig versus Tien Wah? From experience, I would say Chinese are definitely more "hard-working".

Posted by Robert Love > 2013-11-23 12:31 | Report Abuse

One should ask the hard truth . Why does Amcor divest its stake in Tien Wah if Tien Wah is so good ? Amcor is the one of the biggest players in the printing sector in this part of the world .

Posted by houseofordos > 2013-11-23 13:31 | Report Abuse

Robert Love, I appreciate your opposite views on Tien Wah, in fact you have brought up some good points to watch out for in Tien Wah. However for me, I would just disagree with u that it is overvalued. All its metrics are telling me this is a good and well managed company. So I ll just leave it at that.

Posted by kcchongnz > 2013-11-23 15:44 | Report Abuse

Hi Robert, nice to hear you talking about your New Toyo and now Amvig (?). Now for a start, you haven’t responded to my questions in the post below questioning you for promoting New Toyo by talking down Tien Wah continuously. Could you go back to this post and give us some response, instead of deleted all your previous posts?

Posted by kcchongnz > Nov 14, 2013 09:26 AM | Report Abuse X


YOUR FOLLOWING TWO POSTS BASICALLY TALK ABOUT THE MACRO ECONOMY, AUSSIE $, SMOKING BAN ETC WHICH I DON’T KNOW WHAT TO SAY. IT IS BEYOND OUR CONTROL.

Posted by Robert Love > Nov 21, 2013 03:29 PM | Report Abuse
Posted by Robert Love > Nov 21, 2013 03:29 PM | Report Abuse

TIEN WAH SHARE PRICE SHOULD RETREAT TO 2.2 TO 2.3 THEN ONLY SUSTAINABLE? RATIONALE? REASONS? ANALYSIS? CHARTS?

Posted by Robert Love > Nov 21, 2013 04:09 PM | Report Abuse
Given the above outlook, Tien Wah should retreat back to below its NAV, probably 2.2 to 2.3 RM range. this is more sustainable price range.

OH, THE LAST TIME I TOLD YOU WITHOUT TIEN WAH WHICH IS PROVIDING THE PROFIT AND CASH FOR NEW TOYO, NEW TOYO GOT TO CLOSE SHOP ALREADY. THAT INFORMATION WAS OBTAINED FROM YOUR POST. THAT WAS WHAT THE ARTICLE SAID.

BUT WHY SHOULD WE CARE ABOUT NEW TOYO? ARE WE TALKING ABOUT WORLDWIDE INVESTING? I DON’T KNOW ABOUT OTHERS, I HAVE NO SUCH ABILITY TO DO SO.

NEW TOYO IS THE MASTER OF TIEN WAH? WHO CARES.

Posted by Robert Love > Nov 22, 2013 11:04 AM | Report Abuse
The thing about New Toyo better than Tien Wah is that it has its own specialty paper segment which has picked up strongly with the new contract with PMI, the biggest tobacco player in the world.

If you noticed that although New Toyo only owns 54% of Tien Wah equity, it has more than 70% of Tien Wah's group profit. This is because of the JV called MEIL, which allows New Toyo to cream off profits. MEIL is a money spinner for New Toyo.

Tien Wah's master is New Toyo. This is the truth.

AS I HAVE TOLD YOU, I AM NOT AN EXPERT. THE REST DON’T SEEM TO BE EXPERTS TOO. YOU TELL US THE BELOW THEN.

Posted by Robert Love > Nov 22, 2013 04:45 PM | Report Abuse
Who are the other "top printers" in Malaysia? What is Tien Wah's share of the markets? What is Tien Wah's competitive advantage over other printers?

AMVIG? WHAT THE HELL IS THAT? WHO CARES? IS THAT ALL YOU CAN PROVE AMVIG IS SO MUCH BETTER, THE JUST A FIGURE OR TWO WITHOUT ANY OTHER THINGS?

AMCOR SOLD OFF ITS STAKE IN TIEN WAH MANY YERS AGO? THEY MUST BE REGRETTING NOW LIKE HELL AS YOU KNOW TIEN WAH’S REVENUE AND EARNINGS HAS INCREASED FOUR FOLDS SINCE 5 YEARS AGO.

Posted by Robert Love > Nov 23, 2013 09:02 AM | Report Abuse
A good comparator for Tien Wah is Amvig (listed in Hong Kong).

a. Amvig gross profit margin is the region of 30% while that for Tien Wah is barely 20%.

b. Amvig is constantly undertaking printing capacity expansion for future growth while Tien Wah has already stopped installing new capacity since 2011. This is because demand for Tien Wah’s printing has already stagnated while Amvig is still growing its market share in China.

c. With much better GPM than Tien Wah, Amvig’s P/E is only 8. Should Tien Wah trade above this P/E level? I think not likely. If I am investor, I would rather buy Amvig than Tien Wah. Amcor has a big stake in Amvig but sold off its stake in Tien Wah many years ago.

AGAIN BELOW YOU NEVER SUBSTANTIATE WHAT DO YOU MEAN BY “VALUATION RICH”. MUCH BETTER COUNTER AROUND? OF COURSE. PLEASE SHARE WITH SOME GOOD ANALYSIS.

Posted by Robert Love > Nov 23, 2013 10:58 AM | Report Abuse
Tien Wah "WAS" attractive had one bought it below 2.0 RM but not now. The valuation is quite rich. this is my humble view. There are much better counters out there.

BUT THERE ARE ALSO OTHER COMPANIES DOING BUSINESS IN CHINA MUCH MUCH BETTER THAN AMVIG, SUCH AS XDL. XINGGUAN, CSL ETC.

Posted by Robert Love > Nov 23, 2013 12:10 PM | Report Abuse
We all know that doing business in China is very competitive, and yet Amvig is able to extract much higher gross profit margin than Tien Wah (30% versus 20% or 50% much higher for case of Amvig).

What does this tell us about the level of productivity of Amvig versus Tien Wah? From experience, I would say Chinese are definitely more "hard-working".

WHO SAID TIEN WAH IS SO GOOD? WHERE? BUT I KNOW FOR SURE AMCOR MUST BE BANGING THEIR BALLS NOW FOR DISPOSING TIEN WAH AS TIEN WAH’S REVENUE AND EARNINGS HAS INCREASED BY 4 FOLDS, IN JUST 5 YEARS!

Posted by Robert Love > Nov 23, 2013 12:31 PM | Report Abuse
One should ask the hard truth . Why does Amcor divest its stake in Tien Wah if Tien Wah is so good ? Amcor is the one of the biggest players in the printing sector in this part of the world

Posted by houseofordos > 2013-11-23 16:06 | Report Abuse

http://www.valuebuddies.com/archive/index.php?thread-638-53.html

Amcor's M&A in the tobacco packaging sector might be "moderated" by the big tobacco players who do not want to see Amcor's monopolising all the tobacco-related printing and packaging...

Would Amcor appear to look silly to sell off its stake in Tien Wah to New Toyo few years ago, and come back now to buy it back from New Toyo?

Your points ought to be assessed carefully by investors.
I may add New Toyo got out of the unprofitable corrugated carton box business several years ago. Its existing specialty paper business is also not faring that well. Your have surmised that New Toyo ended up with the 7+3-year BAT supply contract because Amcor opted out. One may also conjecture that Amcor competed with New Toyo, but lost out. Amcor used to be a shareholder of Tien Wah, but sold its stake to New Toyo, enabling the latter to gain control of Tien Wah several years ago. Was Tien Wah such a marginal packaging company that did not excite Amcor?
It may not be true that cigarette packaging is characterised by low profitability. Amvig (which prints cigarette cartons in China) enjoys a high gross profit margin of around 33%. Tien Wah did not fare that badly; last year its gross profit margin was 21%, and may rise as the company scales its learning curve, and as some jobs are channeled to lower-cost Vietnam. Tien Wah's reasonable margin and strong profit are after depreciating the equipment that were bought after the BAT supply contract.

Posted by Robert Love > 2013-11-23 21:49 | Report Abuse

Tks for all the comments.
Let's ask another hard question.
Why does BAT "divest" out its printing functions to other printers like Tien Wah? Was that a shrewd move to "divest and outsource" the “less profitable” segment while keeping to the core profitable tobacco making? If so, aren’t printers just scratching the pot bottom for crumbles?

Posted by bsngpg > 2013-11-23 22:30 | Report Abuse

Sorry, I opine that you have out topic. We are now discussing printing biz surrounding Tien Wah, Amvig and Amcor. You should not compare printing to tobacco in this context. It is very weird when we are talking about price and nutrient of an apples, out of sudden you said orange is more delicious.

Divesting and outsourcing the less profitable segment is a different topic here.

Posted by houseofordos > 2013-11-24 00:10 | Report Abuse

Outsource the printing function due to it being less profitable ? Yea maybe. But that doesnt mean the company doing the outsourcing job cant make good profit. Maybe not as high margins as BAT's tobocco making business, but are we comparing apple to apple here ?

Sometimes ppl outsource the job simply because they dont have the expertise or its not their core competency which is why its less profitable in the first place. In this case, Tien Wah specializes in printing business, past data has shown they have taken up this task from BAT well.

Ever since they took the contract with BAT, and even after BAT impose all the stringent demands on them, causing them to incur high capex to purchase new machines, they still able to make money, good ROI and steadily reducing their debt. All this can be seen if you just go and study their past financial results.

Posted by Robert Love > 2013-11-24 12:16 | Report Abuse

let's be honest with ourselves. What are the key essential growth drivers for Tien Wah when the regulatory environment for tobacco is getting tougher year after year. With the advent of e-cig and 3D-printing, will traditional printers be displaced soon?

Posted by bsngpg > 2013-11-24 13:41 | Report Abuse

Robert Love: welcome back to the topic. I like your point again. Well done. My general understanding on printing industry is that it is a cut-throat biz. Worst still for Tien Wah as regulatory control on printing for tobacco goes tougher each year. If I am not mistaken, Australia banned or proposed to ban printing on tobacco carton. If M’sia bans printing on carton of tobacco, the impact to Tien Wah would be significant. Must well we avoid Tien Wah for the time being?

Posted by Robert Love > 2013-11-24 15:12 | Report Abuse

Tobacco companies are trying to put up a false pretence that plain packaging has not impacted on the sales volume of cigarettes. But this might not be true. Just look at Tien Wah’s Q3 result will give one an idea of the degree of impact. Q3 was typically the strongest quarter.

Profit before tax (Tien Wah's Q3 Results)
Profit before tax of RM12.3 million for the third quarter ended 30 September 2013 was lower by RM2.0
million or 14.0% as compared to the preceding year corresponding quarter of RM14.3 million.
The aforesaid unfavourable results for the quarter were impacted by lower revenue and weakening of the
Australian dollar over the preceding year corresponding quarter

Posted by Robert Love > 2013-11-25 08:59 | Report Abuse

let's be frank with ourselves. It is not going to be a multi-bagger at this current price level. Is there enough safety of margin of at least 50% upside potential? Don't think so too.

There are simply no catalysts for upside price movement...

Posted by bsngpg > 2013-11-25 09:46 | Report Abuse

Robert Love: Sorry, this time let me out of topic a bit. I opine that what should be discussed on Tien Wah have been most or less discussed. Going further may not be necessary or does not bring more benefit. This is my two cents only.

Posted by Robert Love > 2013-11-25 22:45 | Report Abuse

http://www.proprint.com.au/News/312283,plain-tobacco-pack-law-puts-the-choke-on-fancy-printing.aspx

Impact of Plain Packaging on Anzpac (JV b/w New Toyo and Tien Wah).

Posted by tsurukame > 2013-11-27 01:03 | Report Abuse

Robert Love,
In business one can never have a fixed view of what is going to happen in the future....some may emphasized that brilliant strategies were a result of detail planning but others would disagree stating that brilliant strategies arise out of accident really and even that is so and if one does not possess a flexible, opportunistic mind-set...brilliant strategies may not even materialize......

There is currency wars happening in todays world and no one can really predict the outcome...I would like to just leave an idea with you...Enterprising business people sees opportunities when the others are oblivious to it...one can never exactly predict the future outcome even if one wants to....likewise what will Janet Yellen do when she takes over....continue with tapering or introduce negative interest rate on cash deposits or something creative that keeps interest rate very low??? What will be the likely impact on this world... your best estimate may not really be precisely correct. Therefore there is lots of uncertainty....and the only certainty apart from death is there is absolute certainty that there will be uncertainty in this global world that we are all living in..

Due to the uncertainty of business possibilities and business impossibilities... the only certainty for Value Investor is to rely on Graham net net basis of determining intrinsic valuation ... and in that respect I would concur with kcchongnz method of determining intrinsic valuation of Tienwah using the Graham net net methodology...

good night and have a good week ahead!!

Posted by Robert Love > 2013-12-02 11:31 | Report Abuse

In property market cycle, u don't buy when the cycle is at its peak and the bubble is about to prickle. Similar for Tien Wah too. thisis my humble view. tks.

Posted by Robert Love > 2013-12-05 23:33 | Report Abuse

http://www.dailyliberal.com.au/story/1945046/price-of-cigarettes-increases-125/?cs=112

Good Luck to Tien Wah. Printing Volume in Australia will continue to slide. Coupled this with the decline in Aussie Dollar, Tien Wah Q4 is expected to be badly impacted...

Posted by houseofordos > 2013-12-17 14:29 | Report Abuse

re-posting this good article on TienWah by haikeyila

http://www.slideshare.net/kennethlai376/stock-pitch-twp-v1

Posted by Robert Love > 2013-12-22 11:08 | Report Abuse

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1498733

massive dumping by Armed Forces; more than 2% in a single day!

Posted by cpng > 2013-12-22 12:32 | Report Abuse

Happy 冬至!!

Today is sunday and chinese traditional 冬至吃汤圆。。

You still busy talk down Tienwah...

Posted by Robert Love > 2014-02-25 20:06 | Report Abuse

Terrible set of Q4 results. Tien Wah has cut its final dividend. Expect share price to drop to below 2.50 RM...

Posted by Robert Love > 2014-02-25 20:08 | Report Abuse

with tobacco tax increase in Singapore, Malaysia and Australia plus plain packaging in Australia, printing volume and revenue have been seriously impacted. Those who continue to defend that Tien Wah's business is sustainable should think twice!

Posted by Robert Love > 2014-02-26 08:57 | Report Abuse

All the brave defenders of Tien Wah all gone without a trace? Or are they frightened by Tien Wah Q4 terrible results?

Posted by Robert Love > 2014-02-26 09:03 | Report Abuse

Tien Wah dropped by 3.2% at opening. Let's see how low it dropped. Bid is at 2.40RM. Don't think people will come out and say " I will buy when it drops lower..."...

Posted by Robert Love > 2014-02-26 09:36 | Report Abuse

2.43RM down 6.17%!!!

Posted by Robert Love > 2014-02-26 09:46 | Report Abuse

those who continued to buy Tien Wah at above 2.50 RM will be regretting now... think Tien Wah is now set to correct to below 2.40RM...might even reach 2.30RM... Just be patient...

Posted by cpng > 2014-02-26 09:55 | Report Abuse

Buy some adding to the portfolio..

Posted by bsngpg > 2014-02-26 09:56 | Report Abuse

Robert Love's has reasonable points to support his comments. I respect his constructive comments. He should not be flagged. Thks.

Posted by cpng > 2014-02-26 10:00 | Report Abuse

Agreed...open mind thinking ...

He want to talk down....no a big deal...

This counter is not for contra or trading play.

Posted by cpng > 2014-02-26 10:21 | Report Abuse

More selling ..pls...

Need to accumulate low...

Posted by Robert Love > 2014-02-26 11:04 | Report Abuse

I am not talking down. I am talking facts...

Posted by cpng > 2014-02-26 11:15 | Report Abuse

Diff ppl diff views..so can let the stock has trading matching...

Australian dollar depreciate against USD ...negative impact,

Also the cigarette volume fom BAT reducing..

But this Tienwah for me is defensive base...my major margin collateral..becos the price is more stable compare others...somemore got the LTAT big fund support..

Posted by cpng > 2014-02-26 11:17 | Report Abuse

There is one thing I am worry..
The major shareholder privatization..

Posted by Robert Love > 2014-02-26 12:19 | Report Abuse

New Toyo can buy over Tien Wah on the cheap. This is a super real concern for Tien Wah shareholders. With so much cash in New Toyo, this can be easily done.

Posted by Robert Love > 2014-02-26 20:14 | Report Abuse

New Toyo's full year results for FY13 has improved over FY12 (unlike Tien Wah). As mentioned before, New Toyo has other sources of income (e.g. specialty paper segment)...Much more diversified than Tien Wah and resilient as well!

Posted by cpng > 2014-02-27 10:15 | Report Abuse

No more cheap stuffs to collect.

The weak holders all dumped to strong buyers

Posted by Robert Love > 2014-02-28 23:52 | Report Abuse

why is haikeyila so quiet?

"ask a million more questions, squeeze your balls tight and watch the counter cross RM3 and pay special dividends."

Cross RM3 dollars? must be dreaming until cow comes home...haha

Posted by Robert Love > 2014-02-28 23:55 | Report Abuse

Some of my friends asked isn't buying Tien Wah similar to buying a business trust? Tien Wah asked Shareholders for money (i.e. rights issue) back then although it did give back some in dividends.

Is this kind of asset heavy business sustainable? If you look at Tien Wah, it looks like it is starting to ramp up is capex investment again (15mil RM)....

Posted by tobacco > 2014-03-03 10:01 | Report Abuse

New Toyo has announced reolcation of a printing line to a lower-cost country --- from Australia to Vietnam? Hence the redundancy payment.

Posted by Robert Love > 2014-03-03 19:13 | Report Abuse

does this mean that the factory space at Anzpac will be sold off or leased out? Will this lead to a mark-to-market valuation?

Posted by Robert Love > 2014-03-03 19:28 | Report Abuse

understand that Tien Wah/New Toyo might have paid a hefty price to BAT for the 7-yr exclusive contract...

Posted by tobacco > 2014-03-04 20:55 | Report Abuse

Robert Love
What was the price then, since you have knowledge of it?
Thank you.

Posted by Robert Love > 2014-03-05 19:09 | Report Abuse

$60mil Aussie dollar for Anzpac...

Posted by tobacco > 2014-03-06 21:33 | Report Abuse

Did Tien Wah pay a hefty price for the 7-year exclusive contract?
The A$60m (RM175m) purchase price of Anzpac was in excess of Anzpac's NAV by RM 39m, which was captured as contarct value in Tien Wah's balance sheet.
Anzpac's NAV was RM146m in 2008. Of its RM100m PPE, RM48m was the book value of the freehold factory land.
Every year, PPE (other than the freehold land) was depreciated and contract value amortised. On 31 Dec 2013 the contratc value was RM17m.
During the 5 years as Tien Wah's subsidiary, Anzpac as well as BAT exclusive contract contributed RM 92m in profit.

Posted by Robert Love > 2014-03-06 22:49 | Report Abuse

Sorry what does all these figures say? Has Tien Wah made back more than the $175mil RM purchase price?

Posted by tobacco > 2014-03-07 06:18 | Report Abuse

You should have infered that the deal is not necessarily a bad one.

The investment cost comprised the RM 48m freehold land cost. Unless the land value has decreased, the actual investment cost was RM 127m.

In the first 5 years of the contract, Tien Wah made at least RM 114m:
Profit RM 92m
Amortisation of contract value RM 22m
Depreciation of fixed assets (RM 42m) not known

The 7-year contract has 2 years left and may be renewed for another 3 years.

Posted by tobacco > 2014-03-08 09:04 | Report Abuse

Two typo errors in my earlier two posts.
The correct figures should be:

Purchase price of Anzpac RM 175m (A$ 60m)
Comprising
NAV of Anzpac RM 136m (RM 146m earlier)
Value of exclusive contract RM 39m
NAV of Anzpac included
Freehold land RM 48m
Other PPE RM 52m

Tien Wah made at least RM 114m in the first five years of the contract:
Profit RM 92m
Amortisation of contract RM 22m
Depreciation of fixed assets (RM 52m [RM 42m earlier]) not known

Posted by Robert Love > 2014-03-08 13:29 | Report Abuse

Yes, Mr Tobacco, you may be right in the above

But we need to see from a bigger perspective.

How much have Tien Wah taken from Shareholder since Day One?
Does it need to keep asking Shareholders for money every time it steps up capex or every time it needs to do an acquisition?