Posted by Syndicates > 2021-10-15 10:37 | Report Abuse

this boss is stingy. if there's revision of offer, he might wait till another 6 months to do it so that he will be free from obligation to pay additional price to those who have accepted the offer in this round.

Posted by dragon328 > 2021-10-15 11:57 | Report Abuse

Somehow my previous posts got all blocked.

Posted by dragon328 > 2021-10-15 12:07 | Report Abuse

I have the same feeling. Looking at the desperate moves and pathetic valuation by the IA, I doubt there will be any revised offer at all.


Posted by Syndicates > Oct 15, 2021 10:37 AM | Report Abuse

this boss is stingy. if there's revision of offer, he might wait till another 6 months to do it so that he will be free from obligation to pay additional price to those who have accepted the offer in this round.

Posted by dragon328 > 2021-10-15 12:24 | Report Abuse

this is frustrating. Posting many times still not successful.

Posted by dragon328 > 2021-10-15 12:25 | Report Abuse

can only post one sentence by sentence

Posted by dragon328 > 2021-10-15 12:26 | Report Abuse

In trying to impress the top boss, the management of Daibochi has overdone it in suppressing the fair value of the company.

Posted by dragon328 > 2021-10-15 12:30 | Report Abuse

It has come to an impression that the management of Daibochi thinks that the RM100m capex expansion is a complete waste of shareholders' money and will not bring any good to the company in future,

Posted by dragon328 > 2021-10-15 12:40 | Report Abuse

or they think the fair value of the company should be just at RM2.10 level and Scientxx is really dumb in offering RM2.70.

Posted by dragon328 > 2021-10-15 12:42 | Report Abuse

The privatisation saga is not bringing any good to Daibochi shareholders but indirectly revealed the narrow-minded corporate mindset and compromised integrity of the management.

Posted by dragon328 > 2021-10-15 12:43 | Report Abuse

It somehow shows similar corporate culture in the parent itself, trying to win it all and not creating any win-win situation for stakeholders. I reckon that companies with such corporate mindset will not prevail in long run.

Posted by dragon328 > 2021-10-15 12:45 | Report Abuse

One would imagine what sort of affordable houses one would get from a developer who always want to win it all. And how would Daibochi continue to win the trust and maintain good relationship with its long term MNCs if it tries to win it all?

Posted by dragon328 > 2021-10-15 12:47 | Report Abuse

I am really disgruntled by the privatisation manaeuvres of Scientex and despise the cooperation by Daibochi management to only fulfill the agenda of its parent company, failing to protect the value of its other shareholders.

Posted by dragon328 > 2021-10-15 12:49 | Report Abuse

I am afraid such a company management will not be generating good values for the company shareholders in long run, with such corporate mentality and such a parent company tying its hands in managing the company.

Posted by dragon328 > 2021-10-15 12:50 | Report Abuse

I choose to sell off all my Daibochi holdings at RM2.71 in the open market rather than accepting the offer from Scientex.

I switch to other companies with better management.

Posted by observatory > 2021-10-15 17:15 | Report Abuse

@dragon328,
I have similar experience with i3 forum before where long comments don’t get posted. The problem usually resolves by itself after some short comments are posted or after a day. This crankiness reminds me of the early incident here where a new forumer with opposing view claimed a conspiracy to censor him!

Understand your frustration. More about it in my next comment. But first congratulatie again for realizing profit!

Posted by dragon328 > 2021-10-15 17:26 | Report Abuse

Not being able to post long comments here is just a small frustration. A much bigger frustration is to see a great company that I have been following for years going nowhere with its management not creating values for its shareholders anymore but focusing on short term gains for themselves and parent company.

Posted by observatory > 2021-10-15 17:28 | Report Abuse

Daibochi board (minus the Scientex representative who abstained) seems to deny their own good efforts when they endorsed a report that downplays the contribution of the RM100m investment which expands company capacity by 60%.

However this is not entirely unexpected. Valuation involves judgement. There is no strictly right or wrong answer. Probably some unspoken norms are involved. Besides, few in the corporate world would like to be the heroes insisting they will deliver even better results than needed, especially when the boss is not asking for that answer!

Below is how I imagine it could possibly happen. Not saying that it did. Just a probable scenario based on my own observation in the corporate world.

First when the outside adviser won the job they already got the picture. As part of their methodology, the adviser then asked the board and management for their inputs involving forecasts and targets. Typical management will rather err on the side of being conservative, especially if the boss is not demanding! The advisers then fed those conservative input into their own DCF black box and out came the result. After some beautification next they presented to the board and sought endorsement. How could the board dispute the validity of experts' output that are produced by following the best-in-class methodology? Little by little, this is probably how the adviser report get produced with the good and genuine effort of everybody.

Of course, as shareholder then it becomes my job to examine their output and comment on it, criticizing it where it deserves. Not that it will make a difference as probably everyone of us have also made up our mind, with or without this report. This is just for the fun of it!

And to be fair, I also want to recognize Daibochi board for not engaging in any kitchen sinking with last quarterly results. A big impairment could have put fears to some minority shareholders.

While they may have given the appearance of siding with the majority shareholder in the IA report, moving forward I believe the interests of Scientex and other shareholders are aligned. The board and management have to deliver the fruits of the RM100 million investment regardless of the forecast given to the adviser. Scientex which owns 2/3 interests will be more anxious than any other shareholders that Daibochi delivers!

Besides the value of Daibochi, as discuss before, lies in its strong portfolio of MNC clientele which cannot be easily replaced or replicated. For that I will overlook any perceived lack of impartiality which hopefully is just one-off.

Posted by observatory > 2021-10-15 17:47 | Report Abuse

Now I want to take a look from the interests of Scientex.

It’s probably clear by now that, in its current form, the privatization will not happen. However, it's unclear whether Scientex will revise its offer within the 45 days period; and if not, will it return 6 months later.

But from a more strategic perspective, I note there is little synergy between Scientex's affordable housing business and its packaging businesses (other than some capital reallocation). If one part of the business starts to slow down, the whole group could suffer a conglomerate discount. Separate listings could fetch higher valuation and offer greater flexibility.

In fact several weeks ago The Edge has asked Scientex that after privatizing Daibochi would it consider listing the packaging business.

If Scientex wants to pursue this option, then it will have strong desire to privatize Daiboch first; consolidate it; and finally spin off the whole packaging division for a much better price in the future.

If my assumed rationale is right, Scientex will be likely to offer a fair price eventually. The remaining 1/3 shares in Daibochi is a mere fraction of the entire plastic division. Bargaining and squeezing minorities over that 1/3 shares risks missing a bigger goal.

Timing wise, a revised offer may not be immediate. However it probably have to act before Daibochi expansion starts bearing fruits and share price moving up.

Of course, different shareholders have different objectives, risk profile and investment horizons. Just take the action best suited to own interest. Personally I will continue to hold, with or without a revised offer, and plan to top up again should price weakens in the future.

In fact Daibochi is just a small part of my diversified portfolio. Any revised offer won’t make me rich, and any decline in price won’t make me poor either. Somehow the asymmetry in information and power that I see just fires up my interest to learn more about this privatization game and share my view here. The knowledge gained in the process will be my biggest reward.

Posted by observatory > 2021-10-15 21:45 | Report Abuse

Today filing with Bursa shows that Scientex Chief Operating Officer for Packaging Business, Mr. Choo Seng Hong, has accepted his company offer totaling 186,800 shares.

Past filings under the category “General Announcement”, sub category “Dealings in Listed Securities” show that Mr. Choo has accumulated his Daibochi shares in April 2020, the time of market panic, at slightly under RM2 per share. Mr. Choo didn’t sell a single share even in July 2020 when share price touched RM3.

Mr. Choo is another example of Scientex insider bullish on Daibochi prospect (although he accepts the offer now, which is understandable)

Congratulate Mr. Choo for his handsome profit even after netting off a small loss in warrants.

Posted by Multibagger > 2021-10-16 05:42 | Report Abuse

@observatory - "The knowledge gained in the process will be my biggest reward."

Totally agree with you, that is valuable in investing journey as it will sharpen our skills and thought process in evaluating the merits of corporate decision by management.

Posted by EVEBITDA > 2021-10-17 10:51 | Report Abuse

will scientex be prepared to hostile minorities to approve future RPT at next AGM. or sacrifice good business decision for EGO purpose to fight minorities?

Posted by EVEBITDA > 2021-10-17 10:53 | Report Abuse

if apollo and samarang rejects RPT resolutions, Scientex cant capitalise their holding in Daibochi. no added value.

Posted by EVEBITDA > 2021-10-17 10:58 | Report Abuse

also why did Scientex offer a premium to warrant holders? another long term fund public mutual funds hold abt 8%.. lets see their position on this saga.

Posted by iknownuts > 2021-10-17 11:50 | Report Abuse

If apollo/samarang rejects the rpt resos, this will show that its samarang/apollo’s ego talking. i see themselves shooting their own feet if they choose this route.

Premium to warrant was most likely cos a pac bought the warrants at 31.5c earlier so they are bound to offer to buy at that floor price. Can see from the daily queue that scientex does not even bother to buy any warrants at 32c, which sort of tells you which direction they are heading in terms of “revision of offer”

Posted by EVEBITDA > Oct 17, 2021 10:53 AM | Report Abuse

if apollo and samarang rejects RPT resolutions, Scientex cant capitalise their holding in Daibochi. no added value.

Posted by observatory > 2021-10-17 12:31 | Report Abuse

@EVEBITDA, welcome to i3.

PJ Lim and the fund managers are veterans. If they can’t strike a deal now, they will move on and focus on their common interest which is to make Daibochi successful. Scientex can revisit the privatization in future if it sees a strategic need to consolidate Daibochi before listing its plastic division.

Unless one side tries to take unfair advantage, I don’t see why the fund managers should vote against RPTs. Not to mention it takes at least two of out of three (Apollo, Samarang and Public Mutual) to block the resolution. The current shareholding structure will provide the necessary safeguard.

Posted by observatory > 2021-10-17 12:50 | Report Abuse

Scientex doesn’t purchase warrants now probably because any volume it can get doesn't make much difference. Even mother share acquisition appears to go nowhere and is stuck at 67%. Whatever small volume sold in the open market recently has been mopped up by someone else at RM2.71.

Looking back past filings, Scientex did buy warrants aggressively at the beginning. It acquired 1.20m, 0.76m and 0.04m on 9/14, 9/15 and 9/20. It stopped after Apollo acquired the necessary 10% blocking shares through warrant purchase.

Posted by EVEBITDA > 2021-10-17 15:41 | Report Abuse

thank you @ observatory and iknownuts for your inputs. under good governance i agree with both your comments. hope sceintex plays fair with minorities of daibochi..esp with RPTs in future.

Posted by EVEBITDA > 2021-10-17 15:43 | Report Abuse

though we know the independence of the reports were not independent after all based on all your comments and workings. good governence and independence is always impotant to achieve the desired results or else the saga may just continue.

Posted by EVEBITDA > 2021-10-17 15:49 | Report Abuse

@iknownuts.. thank you for highliting thats one Mr.Chua bought the warrants at 31.5 sen within 6 mths prior to the offer.

Posted by observatory > 2021-10-17 16:48 | Report Abuse

@EVEBITDA, to be fair, although Scientex has tried to snap up Daibochi on the cheap while the business is depressed by the pandemic, and before the major capex has started bearing fruits, I don’t see any major governance issue here.

Scientex just behaves opportunistically, especially with its implicit threat of delisting which has failed miserably. Ultimately Scientex is bound by the listing rules. Other major minority shareholders consisting of professional fund managers will provide the necessary check and balance.

We don’t need to hope Scientex to play fair on future RPTs. Now everyone will scrutinize future RPTs and closely monitor the gross margin. As you’ve suggested, any abuse in RPT could lead to these fund managers blocking future resolutions.

From self interest stand point, Scientex owns 2/3 interest in Daibochi. Any unfair gain by Scientex will be offset by a 2/3 loss at the other end of the transaction. A successful RM7 billion enterprise like Scientex will be smart enough not to risk reputation damage by abusing the remaining 1/3 of a small RM900 million subsidiary.

Even if current privatization fails, a successful Daibochi is still in the interest of everyone particularly Scientex, especially if it needs to integrate Daibochi eventually for any strategic reason.

Posted by EVEBITDA > 2021-10-18 21:33 | Report Abuse

just wondering did Scientex launch a 350M GO to just achieve 68%? or even if public mutal sells its 75%?.. quite sad isnt it? a scientex shareholder will surely wonder why?

Posted by EVEBITDA > 2021-10-18 21:36 | Report Abuse

at 75% daibochi will be suspended but still listed as they dont meet 10% spread. is that the game plan?.. will that go well with the funds?

Posted by EVEBITDA > 2021-10-18 21:38 | Report Abuse

is there something else we r missing?.. who is appolo and samarang holding the share for?... just a thought.. hope some one can help.

Posted by EVEBITDA > 2021-10-18 21:39 | Report Abuse

beside valuation ect.. we also got to think will scientex launch a 350M GO without much thoughts?

Posted by observatory > 2021-10-19 00:23 | Report Abuse

@EVEBITDA, don’t really understand your questions.

If the concern is about Daibochi stops trading should Scientex acquire >75%, you may check out this list of companies that have failed to meet the public shareholding spread, but continue to be traded for years.

https://www.bursamalaysia.com/market_information/announcements/company_announcement?keyword=PUBLIC%20SHAREHOLDINGS%20SPREAD&cat=&sub_type=&company=&mkt=&alph=&sec=&subsec=&dt_ht=&dt_lt=&per_page=50&page=1

Guess which year was the last company that got delisted for not meeting the spread?

May I know your interest in this matter?

If you’re Daibochi minority shareholder like me, my sincere advice is to take profit now by selling in the open market or taking up Scientex offer.

Holding on to your Daibochi shares is not without risk. Why not move to safer investment for the peace of mind instead of worrying about all the possible scenarios and second guessing other players’ motives?

Or are you just a disinterested observer? Again?

Posted by EVEBITDA > 2021-10-19 13:48 | Report Abuse

when scientex hits 75%, Daibochi will not meet the 10% public spread requirement which means immediate suspension as Appolo and samarang are deemed substantial shareholders.

Posted by EVEBITDA > 2021-10-19 13:50 | Report Abuse

having less than 25% public sharholding... bursa will not suspend but less than 10% is immediate suspension. but no delisting until 90% supports a delisting.

Posted by EVEBITDA > 2021-10-19 13:51 | Report Abuse

since appolo and samarang are substantial shareholders ie collective 10% and 5% or 15%... daibochi will not meet public sharholding of 10%

Posted by EVEBITDA > 2021-10-19 13:54 | Report Abuse

a suspended but not delisted company will still need to comply all bursa requirements. which can b a pain to most companies and shareholders. which will result in bad irrational decisions.

Posted by EVEBITDA > 2021-10-19 13:56 | Report Abuse

looks like thats where daibochi will head if appolo and samarang does not accept offer or if scientex does not increase the offer price. may result in a lose lose situation.

Posted by EVEBITDA > 2021-10-19 13:57 | Report Abuse

i am a shareholder of Daibochi.

Posted by observatory > 2021-10-19 14:55 | Report Abuse

Refer to Bursa Listing Requirement. According to the latest version of Chapter 1, updated as of 1 Oct 2020.

The definition of “public” is

***********************************

(a) in relation to a corporation, means all persons or members of the public but excludes -

(i) directors of an applicant or a listed issuer and its subsidiaries;

(ii) substantial shareholders of an applicant or a listed issuer except where such a shareholder fulfils all the following requirements in which case such shareholder may be included as a “public” shareholder:

(aa) such shareholder’s interest, directly or indirectly is not more than 15% of the total number of shares of the applicant or listed issuer;
(bb) such shareholder is not a promoter of the applicant or listed issuer; and
(cc) such shareholder is either –
(A) a statutory institution who is managing funds belonging to contributors or investors who are
members of the public; or
(B) an entity established as a collective investment scheme, such as closed end funds, unit trusts or investment funds (but excluding investment holding companies);

(iii) associates of directors or substantial shareholders of an applicant or a listed issuer;


***********************************

Source:
https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_entry5ce3b50239fba2627b2864be/5ce3b58c39fba2646fab55b3/files/MAIN_Chap1_NewIssOrs__1Oct2020_.pdf?1601521305


Based on (a) (ii) (aa), neither Apollo nor Samarang hold more than 15% of Daibochi shares.

Based on (a) (ii) (cc) (B), Apollo and Samarang are collective investment scheme.

Therefore the holdings of Apollo and Samarang are part of the public shareholding.

Nonetheless, given you have many concerns, even though not valid in my view, if I were you I would have already sold the shares to have a peace of mind.

Posted by observatory > 2021-10-19 14:55 | Report Abuse

BTW how do you know Public Mutual has already accepted Scientex offer? From insider source?

Posted by Bgt 9963 > 2021-10-19 16:00 | Report Abuse

Offer too low !

Posted by EVEBITDA > 2021-10-19 16:56 | Report Abuse

i do not know if public mutual has accepted. just an assumption if they accept, scientex will get 75%.

Posted by EVEBITDA > 2021-10-19 16:58 | Report Abuse

not sure IF appolo and samarang are accepted as "Collective Investment Scheme" by bursa. i hope its a blanket approval by bursa as explained above.

Posted by observatory > 2021-10-19 17:19 | Report Abuse

OK, so the Public Mutual’s acceptance is just another scenario.

Nothing is for sure in investment as well as in life. There is always another scenario around the corner that has not been considered. So my sincere advice remains unchanged. Anyone with low risk tolerance is better off selling now rather than agonizing over N other possible scenarios which may or may not happen.

Posted by EVEBITDA > 2021-10-19 18:15 | Report Abuse

thanks @ observatory. u seem well versed on bursa rules. learnt lots from you. thank you again.

Posted by EVEBITDA > 2021-10-19 18:17 | Report Abuse

i will not sell my shares in market but may just accept the offer and hope for a revision by scientex. hope logic prevails in all shareholders including scientex and the funds and resolves this saga in a win win deal.

Posted by observatory > 2021-10-19 19:56 | Report Abuse

Got to thank Scientex for that. Its inept threat of delisting forces me to learn.

I read your very first forum comment dated just two days ago. It seems that you’re bullish on KPJ. Yeah, you can consider switching from low conviction Daibochi to high conviction KPJ. All the best!