Monday, October 25, 2010

SKPRES ... Oct10


Dispelling speculation that a privatisation exercise is on the table, the Gan family of SKP Resources Bhd said they have been buying more shares in the plastic components manufacturer because its shares are “undervalued” and do not reflect the company’s strong fundamentals and production capabilities.

To reiterate, SKP’s major shareholder Datuk Gan Kim Huat recently upped his interest, from 62.2% to 70.8% in Sept 2010, just a few percentage points short of the 75% threshold for major shareholdings in any given public-listed company to warrant continued listing on Bursa Malaysia.

Gan holds an 8.79% direct stake in SKP, with another indirect stake of 62% held via four private vehicles — Renown Million Sdn Bhd, Beyond Imagination Sdn Bhd, Graceful Assessment Sdn Bhd and Zenith Highlight Sdn Bhd.

SKP’s executive director Ivan Gan, son of Kim Huat, said “appropriate” action might be taken, when the time was right, should major shareholders feel that the company’s shares continued to remain undervalued in the future. But (privatisation of SKP is) not at this moment.

SKP’s strong balance sheet and rising earnings, coupled with Gan’s purchases of additional shares in the company recently, prompted speculation of a privatisation exercise.

As at June 30, it was sitting on RM43.94 million cash, with no borrowings. Meanwhile, its net current receivables, after deducting payables, stood at RM27.68 million. Its net assets per share were 24 sen.

Stripping out its cash, the stock is trading at 7.3 times its FY10 ended March 31 earnings of RM12.48 million or 2.08 sen a share.

SKP’s latest set of financials have improved. Net profit in 1QFY11 ended June 30, rose 33.3% to RM4.48 million or 0.75 sen a  share, from RM3.36 million or 0.56 sen a share a year earlier, helped by the firm’s different product mix, according to notes accompanying its quarterly financials. Revenue grew 20.1% to RM50.62 million from RM42.16 million.

The company had earmarked up to RM8 million for capital expenditure to improve its current production facilities, including the purchase of new machinery and upgrading of existing machines.

SKP currently has four factories in Johor, of which three are in Batu Pahat with another in Johor Bahru. These facilities have existing utilisation rates of 65% to 70%. Ivan declined to specify the output capacity of these factories.

SKP manufactures plastic components for various electrical and electronic products including audio visual and computers for multinational companies based in Malaysia. Its clients include global names like Sony, Panasonic, Sharp and Hewlett Packard.

In November 2009, SKP had entered into a contract manufacturing agreement with UK-based Dyson Manufacturing Sdn Bhd where SKP would produce and supply vacuum cleaners and other products for Dyson.
Dispelling speculation that a privatisation exercise is on the table, the Gan family of SKP Resources Bhd said they have been buying more shares in the plastic components manufacturer because its shares are “undervalued” and do not reflect the company’s strong fundamentals and production capabilities.

To reiterate, SKP’s major shareholder Datuk Gan Kim Huat recently upped his interest, from 62.2% to 70.8% in Sept 2010, just a few percentage points short of the 75% threshold for major shareholdings in any given public-listed company to warrant continued listing on Bursa Malaysia.

Gan holds an 8.79% direct stake in SKP, with another indirect stake of 62% held via four private vehicles — Renown Million Sdn Bhd, Beyond Imagination Sdn Bhd, Graceful Assessment Sdn Bhd and Zenith Highlight Sdn Bhd.

SKP’s executive director Ivan Gan, son of Kim Huat, said “appropriate” action might be taken, when the time was right, should major shareholders feel that the company’s shares continued to remain undervalued in the future. But (privatisation of SKP is) not at this moment.

SKP’s strong balance sheet and rising earnings, coupled with Gan’s purchases of additional shares in the company recently, prompted speculation of a privatisation exercise.

As at June 30, it was sitting on RM43.94 million cash, with no borrowings. Meanwhile, its net current receivables, after deducting payables, stood at RM27.68 million. Its net assets per share were 24 sen.

Stripping out its cash, the stock is trading at 7.3 times its FY10 ended March 31 earnings of RM12.48 million or 2.08 sen a share.

SKP’s latest set of financials have improved. Net profit in 1QFY11 ended June 30, rose 33.3% to RM4.48 million or 0.75 sen a  share, from RM3.36 million or 0.56 sen a share a year earlier, helped by the firm’s different product mix, according to notes accompanying its quarterly financials. Revenue grew 20.1% to RM50.62 million from RM42.16 million.

The company had earmarked up to RM8 million for capital expenditure to improve its current production facilities, including the purchase of new machinery and upgrading of existing machines.

SKP currently has four factories in Johor, of which three are in Batu Pahat with another in Johor Bahru. These facilities have existing utilisation rates of 65% to 70%. Ivan declined to specify the output capacity of these factories.

SKP manufactures plastic components for various electrical and electronic products including audio visual and computers for multinational companies based in Malaysia. Its clients include global names like Sony, Panasonic, Sharp and Hewlett Packard.

In November 2009, SKP had entered into a contract manufacturing agreement with UK-based Dyson Manufacturing Sdn Bhd where SKP would produce and supply vacuum cleaners and other products for Dyson.

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