SCGM (7247) - 5 Quick Things I Learned From SCGM's AGM 2016
Another round of AGM!
SCGM
Berhad is Malaysia's leading thermo-vacuum form plastic packaging
manufacturer. Its products are broadly categorized into Thermo-Vacuum
Formed Plastic Packaging & Extrusion Sheets. A picture is worth a
thousand words. I think the below image says almost everything about
SCGM's operation.
The
AGM was held in Johor and it took me about 3.5 hours to reach the
hotel. What a chance to get away from my office and recharge myself!
Few
months back, I came across SCGM when I was searching deeply for good
and undervalued companies. Its financial reports show attractive
numbers. As such, I decided to attend the company's AGM this year to
know more about its management and future prospects of the business.
Here are the things I learned from SCGM's 2016 AGM:
#1. Dividend payout ratio
A
shareholder asked if the dividend payout ratio will be maintained. Dato
Sri Lee Hock Seng, the executive chairman, was reluctant to give a
clear answer due to information sensitivity. However, he assured that
dividend payout ratio will be at least 40% and hopefully, when things
get better, dividends payout will be higher.
#2. Private placement
Another
shareholder asked to clarify about SCGM's private placements. Dato Sri
Lee Hock Seng said that the current placement is mainly for expansion
purposes. The previous placement was sold to 6 to 7 new shareholders.
#3. A bit about expansion
The newly-acquired 19.5 acres of land will take about 2 years to construct. Additionally,
SCGM has bought a new factory in Kulai with a built up area of
roughly 30,000 sqft. While waiting for the new factories to complete,
they are currently renting factory spaces. Besides, the management is
also bringing in 4 new machines from the Europe.
#4. Share buyback
The
same shareholder questioned about the purpose of getting the share
buyback mandate approved last year because there was no buybacks
executed. Dato Sri Lee Hock Seng mentioned that SCGM needs to reserve
more cash in the company in view of the expansion plans, which
requires more than RM100 million.
#5. Directors share acquisitions
The management raised the attention that they are buying SCGM's shares recently.
SCGM (7247) - 5 Quick Things I Learned From SCGM's AGM 2016
http://www.valueinvestingstock.com/single-post/2016/09/03/5-Quick-Things-I-Learned-From-SCGMs-AGM-2016
