Thursday, 2 June 2011

KianJoo: "Can" give bonus?


Kianjoo is initially a family business (See's family) started in the 1950s. The company has never been peaceful since the 1990s. First there are dispute among the directors (or shareholders or family members). Then came the long running on-going lawsuit between the See's family and Can One berhad. Then recently Can One filed another lawsuit against the bonus issue/free warrants proposal by Kian Joo. Despite all this negative issues, surprisingly Kian Joo still manage to sail through the hardship and maintain the status of leader in can/tin manufacturing.

I'm not clear what is really happening among the See's family members. Here are some information I gather so far. The dispute and tussel between the See's family members started since 1991. It is like HK drama series. At that time, the largest shareholder of Kian Joo is Kian Joo Holdings Sdn Bhd which held 37% of Kian Joo's share (currently 32.9%). All of KJ Holdings shareholders are the See's family members. The family dispute resulted in the formation of 2 opposing groups. One group is led by the managing director Dato See Teow Chuan and the other group is led by Anthony See Teow Guan, the executive director or younger brother. Of course both parties have different opinion. The Dato group wants to sell all the shares in KJ Holding but the Anthony group wish to distribute the shares accordingly to the family members. Since the Dato group has 52% in KJ Holdings, KJ Holdings is finally put on sale publicly in 1996. They appointed a liquidator, KPMG for the share sale.

I don't know what's the reason or twist and turn behind it, all the KJ Holdings shares finally were sold to Can One International, which is suppose to be Kian Joo's competitor. Competitor suddenly becomes major shareholder? At this moment all the See's family members are against the "hostile takeover". So a lawsuit was filed which claimed that there was corruption between the liquidator and Can One.

Nevertheless, despite their family issue, all the directors seems able to cooperate well in the company. How good is Kian Joo's business? They mainly produce tins/cans. We can see their aluminium can and tin products everyday: milk powder, milo, condensed milk, sardines, fruits, soft drink, fruit drink, biscuits, chocolates, moon cakes, cooking oil, motor oil, paint, aerosol, ink, chemicals etc. Lets check their customers: Nestle, Dutch lady, Coca cola, Sprite, 100 plus, drinho, pokka, power root, Anmum, Ayam brand, Rex, Cadbury, Vochelle, Julie's, Munchy, etc etc.



Kian Joo's financial results


Revenue (mil)Net profit (mil)
200565450
200665729
200778945
200887669
200987549
2010992102

Although the profit is not growing consistently throughout the years, the revenue looks encouraging. The business is still consistent and expanding. Drop in 2009's net profit was due to some one-off special company exercise.

Kian Joo earlier in March proposed one-for-two bonus issue and rights issue of one warrant for every four Kian Joo's shares held after the proposed bonus. This looks very attractive! However, Can One, the potential future largest shareholder of Kian Joo opposed and filed a lawsuit against it. Perhaps Can One fears that this exercise will dilute their future share holding in Kian Joo?

Anyway, after the news of objection came out, Kian Joo's share price has tumbled from 2.50 to 1.94 today, despite the annoucement of the impressive 2011Q1 results in which the revenue grows 18% and net profit grows 40% QoQ! This is on track for another record revenue & profit year!

KianJoo: Supported at 100day MA with MACD ready to crossover & RSI below 30%

Personally I think this may be the opportunity to buy Kian Joo's share. I'm not sure when and how the bonus/right issue proposal trial will end. If the bonus/free warrant are given, the price may rally. If the bonus is cancelled, then we can imagine how the share price will react. However, in the long run, I think Kian Joo price is going to grow along with its business. The reasons? Sustainable business, market leader, economy recovery and good management. There may be risk of high commodity price or suddenly Nestle or Coca cola refuse to continue their contract with Kian Joo. At PE of 8.4, EPS 23 cents, dividen yield 7% and NTA 2.01, it really looks attractive, isn't it?

4 comments:

didi said...

kianjoo saga had been going on and on for many years, still cannot c the light at the end of the tunnel in the near future.....against all odds comes the bonus/right issue....with the law suit continuing, i feel doubtful this will be realized, or how long it will dragged before it will be exercised.....too much of uncertainties, too many hidden gems in bursa....avoid

didi said...

take a look at MBMR...growing business, increasing revenue, steady EPS, new model of MYVI coming in 2 weeks time, another model coming in the 2nd half of the year, production affected by earthquake will be resolved by July, share price slowly climbing for the past 1 week with relatively increasing volume(expected new MYVI to give earning boost??)....but no significant share buy back by insiders/directors and it is a corner stock with thin volume

in short, it has strong fundamentals and theme for speculator to goreng in the short term...any commnet???

OAP said...

With your points above, MBMR looks good to invest in at the moment! Do u know how many % perodua sales contribute to the total revenue of MBMR? I think Perodua in the future definitely will get more competition it ever faced. Any idea what is the other new model to be launched this year? A C-segment?

didi said...

sori, i don't know the exact figure, but MBMR is also dealer for volvo, volk, hino, daihatsu....but still perodua is the main contributor of revenue in its auto sales

the new model is 1.5cc, u can c its advertisement in youtube, goin to be another bestseller...

share price up from 2.95+- 2 weeks ago to 3.16 today, analyst giving buy recommendation wf TP +-3.80.....i think goin to be goreng soon