TIENWAH (7374) - Centralising Operation to Enhance Earning? - YiStock

This piece of news cleared the air!

 

BAT is shutting down its factory in PJ and immediately from facebook, to whatsapp, friends are worried about Tien Wah.

 

Let dig a bit.

 

The factory: Tobacco Importers and Manufacturers is located right at PJ

 

AS Tien Wah has not released it 2015 Annual Report, i can only dig from 2014 report. See below:

From above, we can see that the PJ BAT factory contributed approximately 15.5% to Tien Wah total 2014 revenue. Much bigger order are from BAT singapore and BAT Australia.

 

From BAT announcement, their intention is "to source the tobacco product for malaysia market FROM OTHER BAT FACTORIES"

 

SO, the above issue is not really an issue and more order will be for BAT regional factories (SG, AUS) which should translate more sales to TIEN WAH too. Is like making a round. 

 

But i'm now happy because it may now charge in USD/ SGD, rather than RINGGIT.

 

Now, I saw 2 positives development:

 

(1) Income Stream From Property Development

 

Being a exclusive supplier for BAT, the management of BAT will sure have meeting with all the major suppliers about their plan. Restructuring is major issue and sure will be communicated with Tien Wah.

 

Tien Wah, has therefore, take advantage of this to centralising its production (to minimise the cost) and looking into possible income from the PJ prime land. 

 

If you search the property list of Tien Wah, you will see the size of the land. That combined to 140k sf size of prime land in PJ. 

 

If you see further, the factories over other places combined are 2 times larger than PJ factory. 

 

 

This piece of 140k sf should be enough for commercial properties. Service Apartment with mall? I hope so. 

 

 

 (2) Centralising Operation to JB to cut production cost and enhance earning?

 

Tien Wah group has 3 other local factories located in SG and JB. 

 

 

For the past 2 years corporate development and the high cost of operating from SG, i'm speculating their next move is to transfer SG factory production to JB and give more business to Tien Wah Holding Berhad, Tampoi. And other non-tobacco business of Tien Wah in PJ, if any, will be transferred to JB too. Better earning ahead? 

 

Cheers!

 

p/s: a major share holders has been disposing share recently. I have a discussion with my friend. Our conclusion is that: Being the major shareholders, I have 2 choices: 

first, take more money out to subscribe the rights, or, 

second, if i can't take out more money, I should sell some holding now to get the fund to subscribe the rights share at cheaper price later. My total shares should increased later again. (not in %)

 

I have about 11 million share (previously 15 million) right now, based on 1:2 ratio at rights price at RM 1.00, in theory i should find RM 5.5 million cash.

 

So, as minority shareholders, you know what to do

TIENWAH (7374) - Centralising Operation to Enhance Earning? - YiStock
http://klse.i3investor.com/blogs/TIENWAH/93337.jsp