Yeoh made big fortune out of his investment in Can One and Kian Joo. But the guys who helped him left. Whether he and his family have enough expertise to run the business is questionable. The new finance team seems to only know how to kitchen sink it seems….

To me, Air Asia is a victim of adoption of MFRS 16 on lease liabilities. The previously unrecognized off balance sheet lease liabilities has been brought back to book and suddenly they are in net current liability situation. The arrangement was always there and i thought the auditors would have qualified the accounts long time ago.

Barring the Covid-19 issue, fundamentally things are still the same.

@gozilla88 Now that I know your source of frustration, you have my sympathy...

What a crap report by MIDF

@gozilla88 Maybe you can share how you have been conned by this counter.

This is one of the counter with the lowest profile, never thumb their chest telling people how good they are. Listed in 2005 at RM1 and has pulled off a small fish eat big fish stunt, built F&B business from virtually nothing to RM1 billion dollar company and in the meantime, never ask shareholders for a single sen and still pay annual dividend of between 3-5 sen.

To me it is a fantastic counter amid low dividend payment and low profile.

The edge reports really does not do justice to how good the deal is, in my opinion.

1. In short, the disposal value will be between RM800m and RM1 b of which RM750m will be paid upon completion. The balance will be paid later. If not paid, it can be converted to shares of Wholesome Dairy which is the new owner of F&B. Meaning if this is not paid, Can-One gets to own shares in F&B again.

2. The balance sum not paid now will attract interest at 8% per annum which, in today's world, very high. I dont think Can-One own borrowing cost is that high...

3. After disposal of F&B, gearing ratio will be between 0.55-0.79 depending on the disposal amount and how it is settled. This will put the old debate on how high the gearing of the group to bed.

4. After the completion, together with consolidated adjustment on Kian Joo, the profit for the year could soar to between RM1b to RM1.2b.

5. Net assets per share will increase from RM4.32 as at end of 2018 to between RM9.22 to RM10.44

No mention on whether there will be a special dividend or not though......

You need a strong heart to follow this counter....stingy on dividend but otherwise a lot of excitement. But if you analyse deeper, they are very very shrewd in their dealings....

1. If you analyse from the annual report, there is a bargain purchase gain of 308 million, meaning value per Kian Joo share in canone book is RM3.10 + RM0.70 = RM3.80 per share. They are only paying RM3.10 per share for it

2. If you follow canone history, the acquisition price of F&B is RM12 million for the first 80% and 39.753 million shares in exchange for the remaining 20%, reported to be worth RM113 million. The total gain from disposal at RM1 billion will be a whopping RM875 million!

3. As at 31 December 2019, the total assets in food product division is RM555 million and total liability is RM312 million. Assuming this all belong to F&B, the net assets they are now selling is worth RM243 million.........gain from disposal will be a whopping RM757 million if dispose at RM1 billion!.

4. It took Canone only 13 years to build up F&B from a seemingly low volume low profit in 2006? to a RM1 billion company

5. From Kian Joo & F&B transactions alone, Canone profit will be at least RM308 million + RM757 million.....in excess of RM1 billion

6. In Q1, you can work out the net assets per share to be worth RM7.45 (including Kian Joo bargain purchase). If you include gain from F&B disposal, the net assets per share will jump to RM11.40 per share

Shrewd piece of business? sure..... Dividend? Lets pray for it

@potentialghost...if Canone drop to RM1, the only happy person will be the MD who will sapu all at dirt cheap price....think again

The market is not pricing johortin properly....perhaps they should rename johormilk instead.....

Lets work out the math....At RM1 billion offer for F&B, it is worth at least RM5 per Can-One share.

Since it has acquired Kian Joo at RM3.10, and with the cash from F&B sale to pay fully loan for Kian Joo acquisition, Kian Joo share will be free from loan. At 3.10 valuation of Kian Joo per Can-One share is more than RM7 per share.

What about Can-One own business? Its crazy

high gearing? what high gearing now?:)

I have always been amazed by this Group. Apart from small fish eat big fish story …… and now at the brink of digesting the whole big fish is just one of the reason.

The fact of the rapid growth since its listing just 14 years ago....to grow the revenue from roughly 120 million to now....I dare say not many manufacturing based company on bursa can match that record.

They are not afraid of gearing up for growth...it seems.

The problem with Johotin report is that the basis of reporting is different from quarter to quarter.

In quarter 1 and 3, the segment information were presented after tax. For quarter 2, it was presented before taxation. Obviously the tax element for Q2 has not been accounted for if you try to reconcile the numbers.

Substandard reporting, I would say.

Pre-acquisition of Kian Joo in 2012, this counter used to register exciting growth. It seems that after the acquisition of Kian Joo, the attention has been on building Kian Joo and growth of its own business has been neglected!

YiStock, there is no property division in Can-One. The "other division" in the segment report includes the contributions by KJ Can already.

From what I understand:
1. FNB does not do milk powder but Kian Joo has a unit which deals with milk powder packing. It is doing contract packing for people. Due to their business model, the turnover is not big as they only charge contract packing fee as they do not want to take the pricing risk on milk powder.

2. From accounting perspective, foreign currency risk in Kian Joo does not flow into Can One. The foreign currency risk disclosed in Can One is purely Can One's own risk, arising (I guess) from export sales.

3. Can One cannot borrow money from Kian Joo due to regulatory issues.

4. They need CFOs who are prudent and do not speculate in currency. Else it would be like IOI last time - disasterous.

In the case of Kian Joo cash reserved for Myanmar, I have the following comments:

1. If the cash has been injected to Myanmar, whether or not it is converted into any other form of assets, there will be no gain or loss to be recognised in the future if the functional currency in Myanmar is also USD.

2. Kian Joo will continue to be expose to foreign currency gain or loss if the money is still kept in Malaysian soil

3. In both of the above scenarios, the cash would still be translated into Ringgit for accounting purposes. The difference is in scenario 1, the gain or loss will be accounted for as translation reserve (not as profit or loss) whereas in scenario 2, it will be considered in profit or loss account.

4. I believe in Kian Joo Q1, the loss is actually a reversal of last year's gain. If you look at 2015 accounts, they recorded huge foreign currency gains.

Hopefully the CFOs are smart enough to manage these risks. Else it will be a disaster.

If you see the term derivative financial instruments in the balance sheet (like in Can One or Kian Joo), you can read further the note. Very likely these refers to the instrument they use to manage foreign currency risk.

We cant just look at the unrealised gain/loss to conclude whether the company have heavy exposure to foreign currency risk. You have to net it of with the gain or loss on derivative to reveal the actual position. This is true at least in the case of Can One.

A good financial guy will manage the cashflows carefully so that the risk is either managed using:
1. Natural hedge (matching foreign currency receivable & payable)
2. Forward contracts (pre-book the rate with the banks)

However, the company will still need to recognise the fluctuation in value of foreign currency assets or liabilities.

To ronnietan, my 2 Sen worth on why unrealised gain/loss is not a cash flow item:

Assuming I have USD100,000 cash at the end of 30 September when USD was at 4.13, I have a cash balance in the book of Rm413,000.

If I kept all these cash until the end of 31 October and the USD rate has increased to 4.16, I have a cash balance of RM416,000.

In the book, I have unrealised profit of RM3,000 but in terms of cash flows, no additional cash has been received or paid out. But I will have to recognise the increase in value as a profit in the income statement but no entry in the cash flow statement.

Past 10 years results
During See Family time:
Revenue growth: 2006 (RM638M), 2007 (RM787M), 2008 (RM876M), 2009 (RM876M), 2010 (RM993M), 2011 (RM1,086M)
Pre-tax profit: 2006 (RM47M), 2007 (RM61M), 2008 (RM90M), 2009 (RM68M), 2010 (RM133M), 2011 (RM139M)

During transition from See Family to Can1 team time:
Revenue growth: 2012 (RM1,162M), 2013 (RM1,291M), 2014 (RM1,335M)
Pre-tax profit: 2012 (RM144), 2013 (RM147M), 2014 (RM144M)

During Can1 time:
Revenue growth: 2015 (RM1,602M) First time in 10 years it grew at 20% rate
Pre-tax profit: 2015 (RM163M) Highest ever in Kian Joo history

But.....if we look at dividends
During See family, between 20% - 35% rate. During Can1, ZERO to paltry 8%!

First half 2016 - revenue again grow 18%. Pre-tax profit takes a beating due to forex loss. Like that can we still expect dividend ? hmmmm

Up_down....Can1 has said they did not receive any offer from KWAP and the value for F&B is also quoted by KWAP.

Whether the value is overpriced or not depends on from what angle you are looking from....I guess

No fear if it is good stocks with good fundamentals....

Dear KC, a lot of commentators in this forum just shoot from the hip and commenting without doing proper analysis, even though their are plenty of info which are presented in the quarterly results.

i would tend to agree more with moneycashrich comment on the push at closing

If Can1 did a share buyback, it has to make announcement according to the listing requirement. There is no announcement to that effect.

Funny thing is the price tag of F&B is not given by Can1, but by the buyer. It is funny because Can1 should be the one who is eager to announce rather than potential buyer. So to say that F&B is overpriced when buyer is the one announcing it, I just cant comprehend.

By the way, F&B counters are priced at that kind of PE.

Funny thing is the price tag of F&B is not given by Can1, but by the buyer. It is funny because Can1 should be the one who is eager to announce rather than potential buyer. So to say that F&B is overpriced when buyer is the one announcing it, I just cant comprehend.

By the way, F&B counters are priced at that kind of PE.

Good investigative analyst would already detected that Kian Joo results is dragged down by unrealized forex losses of RM22 million. The term unrealized means that it can turn the other way round next quarter if RM continues to weaken like what we see today. It can also turn worse if RM strengthen further below 3.9 (closing rate at 31 March).

I would not bet against another record breaking year after looking at good revenue and gross profit growth for Kian Joo.

Anyone attending next week's AGM?

Kian Joo Q1
Revenue up 24%. Gross profit up 29%. Good sign.
Profit down 53%. Bad sign.
Main reason - foreign currency loss 25.2 million of which 22.3 million unrealised. Take unrealised loss out of equation - profit up should be 34.8 million, up 18%.
Why forex loss - USD reserved for capital expenditure and Myanmar investment. Make sense? Judge by yourself. :(

Revenue up 24%. Gross profit up 29%. Good sign.
Profit down 53%. Bad sign.
Main reason - foreign currency loss 25.2 million of which 22.3 million unrealised. Take unrealised loss out of equation - profit up should be 34.8 million, up 18%.
Why forex loss - USD reserved for capital expenditure and Myanmar investment. Make sense? Judge by yourself. :(

Means the original can-one business as second largest tin can maker in the country carries no value......:)

Hopefully this counter wont fall back to the price before Aspire made that offer......seems no excitement already

Posted by Icon8888 > May 1, 2016 10:26 AM

clap clap clap

In real life, we switch from counter to counter and will not pick a stock and stick with it for a year.

Laughable to conclude based on Q4 results. If you look at annual results, clearly EPS of Can-One is 3 times of CBIP. Also no basis of comparison because both are in totally different industry!

Interesting comments http://investmentkai.blogspot.my/2016/04/5105-canone.html

On Toyota Tsusho, it is not fair to say that they rejected the offer. If you read the announcement and blog responsibly, you will note that actually Toyota Tsusho had been told to get professional advice under the listing guidelines nobody is stopping them from coming back.

If you really analyse Can-One, it is not hard to realise that the total investment cost of its initial 80% in F&B Nutrition is only RM12 million!

And if you really follow them, you should know that milk powder price plunge big time in 2015. In this business world, only fools will continue to buy at the same price when raw material price has dropped so much.

Revenue drop may be due to drop in selling price but the profit remain.

Can-One must be doing very well or people really hate them...lol...after CBIP, now we have Superlon - both in totally different business but comparison are made with them...size also different.

Kian Joo AGM over. Can-One AGM next week. When is Johotin releasing its audited accounts?

Technically, the CFO wasn't wrong. Most of the property if you refer to the list of properties are leasehold property where even the land need to be depreciated. Now assuming the figure of increase quoted is RM0.50 per share, this worked out to be RM222 million. Assuming depreciation is over 50 years, (actually some freehold, some longer lease, some shorter lease but lets take 50 years as a benchmark), additional depreciation a year will be RM4.44 million or 1 sen EPS. At PE of 12, future share price will be lower by 12 Sen,

The CFO did not say the revaluation was not done, but was not incorporated in the accounts because they use cost model. Afterall, they have shared with us the info on the RM0.50 upside, right?

On property prices whether it will come down, you just need to look at the property prices in Klang Valley and see whether it has come down. That point is very subjective in my opinion.

On valuation fee, agreed totally that it is peanut to KJ.

When the directors were probed on the Aspire deal, the response was the pricing wasnt right and EPF did not want to raise the price. So the deal is off.

There were also discussions about investment in Myanmar whereby according to CFO, the Group has secured 5 years tax holiday, The Group also acquired a land use rights of 50 years with possible extension for another 25.

Can feel that the See family are still bitter with their line of questioning.... especially on directors remuneration. I privately poke the same question to the CFO why the directors get so much bonus this year compared to last year, he said this year wasnt the odd one out, but last year's figure was too low. In 2013 directors remuneration is >9 million compared to 11 million this year. Last year amount of <4 million was too low and no one made any noise then.....

He also commented that in terms of directors remuneration vs profit ratio, Kian Joo is very low compared to its competitors but did not mention which company. May be we should check Can-One and Johore Tin directors remuneration too

Good for Can-One

Pity See brothers....sold their shares at RM1.65 per share, now share price already more than doubled......

This year's AGM is a tame affair compared to the previous few years.....lol. Only big argument is shareholders wants more dividend but directors wants to "conserve cash for capital expansion".

will try to sit close to see family If I spot them.....lol