Posted by Multibagger > 2021-09-17 04:16 | Report Abuse

I am eager to see whether the coming quarterly results will have more one off or non recurring items to cloud the fair value of the company as lock down provides the excuse needed to reflect a not so rosy picture. I could not imagine how any offeror, in the midst of any privatization offer, would like to paint it otherwise...just my evil thought : )

Posted by iknownuts > 2021-09-17 08:59 | Report Abuse

Right on cue… both shareholders up their stakes.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3193170

Posted by iknownuts > Sep 16, 2021 5:29 PM

Its a no brainer for samarang and apollo to up their stakes. Their upside is huge (if sci ups their offer), but downside is limited to only transaction costs (accept offer at 2.70). Also, upping their stakes will influence other shareholders to play hardball since they are afterall the majority shareholders. It would surprise me if these 2 funds do not buy more shares.

Posted by Bgt 9963 > 2021-09-17 09:03 | Report Abuse

Price is almost same as TGuan...

Posted by observatory > 2021-09-17 09:20 | Report Abuse

Apollo and Samarang topped up their position to strengthen bargaining position against Scientex. Given at least 2 out of 3 of these funds have spoken out, Scientex can't get above 90% without changing its offer.

The Public series of funds may be doing the same. They have the privilege not to disclose their position since they are not substantial shareholders.

Unlike the last two days, all the shares at RM2.70 have been mopped up. Scinetex is not allowed to buy above RM2.70.

Posted by dragon328 > 2021-09-17 10:22 | Report Abuse

I do not expect this upcoming July quarterly result of Daibochi to be exceptionally good, as Scientex privatisation effort is going on.

But I also do not think that they could alter the results too much just to suit into the ongoing privatisation effort.

Key things to look out for in the upcoming results will be any revenue growth and additional capex spent to gauge the management effort to get more customers for its new capacity and the ongoing capex plan of RM100m to raise capacity by 60%.

NO need to read too much into this qtrly earnings which might be easily skewed to fit major shareholders' purposes.

Posted by dragon328 > 2021-09-17 10:28 | Report Abuse

As to what small investors like us can do now, I suggest just holding on to what we have. We have time to monitor the situation in coming days to see how many more shares of Daibochi will be mopped by Scientex and other substantial shareholders. We can decide on the last day of offer if we want to sell our holdings in the open market at RM2.70 and RM0.32.

As we can see now, other big players have crowded off Scientex in the buy orders at RM2.70 for mother and RM0.32 for wb, with more desperate ones nimbling at RM2.71 and RM0.325 forcing Scientex nothing much to do about.

Posted by observatory > 2021-09-18 13:19 | Report Abuse

Today Edge Weekly edition reports on the acquisition. The article mostly repeats the lines of Scientex, and quoting Kenanga and CIMB reports as discussed before.

The cynical side of me couldn't help but notice how CIMB and Kenanga have independently arrived at their so called "fair" value through contradictory assumptions. Can't help but suspect analysts work their valuation backward from TPs they feel compelled to give.

Kenanga took the Bloomberg’s consensus (before CIMB update) 1Y forward net profit RM65.7m; worked out the consensus EPS as RM65.7m/ 327.37m = 20 sen; then slapped a 13X PE on it to get a "fair value" of RM2.60. Just 4% away from Scientex' RM2.70.

Why 13 times PE? It said industry peers' average is 15.5X. 13X because Daibochi lacks pricing power. How about the difference of 10 sen? That is the premium to gaining full control. Sound logical?

Now visit CIMB again. On Jun 23, CIMB prescribed a TP of RM3.83 based on 10 year average forward PE of 18.6X. But after Scientex's offer, CIMB slashed its next year EPS to 14.8 sen to arrive at RM2.75, but still recycling its 10 year PE logic. No surprise, the new TP 2.75 is close to Scientex too even though it's arrived from very different assumption than Kenanga.

If we apply CIMB's EPS of 14.8sen using Kenanga's 13X PE, Daibochi can be shown to worth only RM0.148 * 13 = RM1.92. Does Scientex overpay by 40%?

But if we apply Kenanga's EPS of 20 sen on CIMB's 18.6X PE, Daibochi's value is RM0.20 * 18.6 = RM3.72, 38% higher than current offer price.

What is the value of analysts?

Posted by observatory > 2021-09-18 13:38 | Report Abuse

Former investment banker Ian Yoong said the offer, priced at 12X EV/EBITDA for financial year ending Jul 31, 2021, is fair.

The Edge does not mention Ian's basis of using 12X. However, why use financial year ending Jul 2021? Why not next year EV/EBITDA? FY2021 is the year with severe Covid disruptions, multiple lockdowns as well as Myanmar workers' strike. Does it mean the future will be like the past one year? If so many Bursa stocks can be shown to be way overvalued!

I checked up the historical EV/ EBITDA. The past 5 year average is 19.8X. Current EV/EBITDA is 15.3X. A simplistic calculation will show the value could be up to 30% higher if EV/ EBITDA reverts to 5 year average.

Posted by dragon328 > 2021-09-18 15:59 | Report Abuse

I do not bother buying or reading The Edge Weekly journals anymore as I find most of the articles inside are just recycled materials from here and there, same as equity analysts from Kenanga and CIMB.

Why use a EV/EBITDA multiple of 12x?? bcoz it fits well into Scientex's offer price mah.

The big boy is exercising its muscles onto equity analysts and now even investment journalists to help swaying retail investors to sell off Daibochi to them at the offer price.

Actually all these are totally unnecessary small tricks, getting analysts to produce reports to their advantage. Nowadays even small retail investors are knowledgable enough to be able to tell which analyst's report is unbiased and which one is just made up to suit the big boy.

What Scientex ought to do is just raise the offer price to a more reasonable level eg. RM3.30 then it would get the provatisation done in 2 weeks and get back to real work in improving the company operations, rather than spending endless time trying to take advantage of retail investors with all these trivial little tricks with analysts and media. It will earn no respect from all parties and end up in vain.

Just look up to KLK move - just offer a good fair price once and got control of IJM Plantation within a month, now reaping the full benefits of high palm oil prices from all the plantation output of IJM Plantation by integrating it early with KLK's own operations. As an industry leader, KLK boss truly shows the color of a statesmanship and has earned respects of many from this take-over exercise.

Scientex as an industry leader too in the plastic packaging industry should not be distracted by any unnecessary corporate hiccups that may drag out for months, which would tarnish its reputation and make it lose confidence from even Daibochi's own management / founder and long term investors by undermining the valuation of the latter. Any such prolonged privatisation exercise will surely affect the smooth operation of Daibochi management in completing its expansion plan and efforts in getting more international customers.

I strongly advocate for Scientex to raise the offer price immediately, not after this 21 day offer period, to above RM3.00 for Daibochi mother shares and RM0.60 for daibochi-wb and get this exercise out of the way asap so that Daibochi could focus on its expansion plans and deliver more values to its shareholders.

Posted by observatory > 2021-09-18 17:48 | Report Abuse

I don't want to speculate on the intentions of analysts or even journalists. However while the report may sway some retail investors, some could have even sold already, there is zero impact on big players. The fact that long term shareholders like Apollo and Samarang have increased their positions clearly shows they have a different opinion.

I could be wrong. But I believe Scientex is a stuck with its RM2.70 offer now. Anyone familiar with the rules may correct me, but I believe an offeror cannot increase its offer price in the midst of an offer period. Otherwise it opens a can of worms since some retail investors have already sold at RM2.69/ RM0.32 based on Scientex's stated offer.

Not only that. As I recall in other failed privatizations, an offeror is not allowed to buy at a price higher than its original offer price within the next 6 months. So the soonest they can come back with a revised fair offer is 6 months later.

If my understanding above is right, anyone who plans to hold out need to be patient. This could be unfortunate not just for Daibochi shareholders and management, but also for Scientex. All just because of its original underpriced offer. If Scientex indeed believe there is further synergy to be derived from 100% ownership, its penny pinching is just going to delay that synergy for everyone involved. Not a smart move.

Nonetheless, the fact that any revised offer is at least half a year away doesn't bother me personally. Daibichi has strong fundamentals and is growing well. So I can be as patient as Apollo and Samarang :)

I also don't expect this will be the last time The Edge writes about the privatization. Look forward to reading more interesting stories in the coming weeks and months!

Posted by Multibagger > 2021-09-19 10:05 | Report Abuse

Extract from the Notice of Offer:-

4.5 Duration of the Offer

(a) Original duration
Provided that the Offeror does not withdraw the Offer with the SC's prior written approval and every person is released from any obligation incurred under the Offer, the Offer will remain open for acceptance from the Posting Date for a period of not less than 21 days ("First Closing Date") or such later date(s) as UOBKH may announce, on behalf of the Offeror ("Closing Date").

(b) Revision of the Offer
Pursuant to paragraph 12.03 of the Rules, if the Offer is revised after the Posting Date, the Offeror will:-
(i) announce such revision together with the following information:-
(aa) the revised offer price; and
(bb) the price paid or agreed to be paid and the number of voting shares or voting rights purchased or agreed to be purchased, which lead to the revision;
(ii) post the written notification of the revised take-over offer to all Holders, including all the Holders who have previously accepted the Offer, no later than the 46th day from the date of the Offer Document; and keep the Offer open for acceptance for a period of at least another 14
days from the date of posting of the written notification of the revised take-over offer to all Holders.

( iii)

Where any of the terms of the Offer are revised, Holders who have previously accepted the Offer shall also be entitled to receive the revised consideration that is to be paid or provided for the acceptance of the Offer. The Offer may not be revised after the 46th day from the Posting Date

Posted by observatory > 2021-09-19 12:14 | Report Abuse

@Multibagger, thanks for pointing out.

Posted by Bgt 9963 > 2021-09-19 14:37 | Report Abuse

Going to revise the price...

Posted by dragon328 > 2021-09-19 15:48 | Report Abuse

@Multibagger, many thanks for the extracts from the Notice of Offer.

Typically takeover offfers have provisions for revising the offer price. It does not make sense to keep the offer for too long if it has become clear that the offer price is too low with most retail investors not selling but other substantial shareholders adding their positions, i.e. the offeror will fail anyway.

Scientex should either raise the offer price and wrap up the privatisation soonest or just withdraw the takeover offer and let the market to determine the fair value of Daibochi share price. If it drops back then everyone is free to add position to participate in its long term growth prospects. If it rises then it is again free market movement to determine how high it is worth then.

Posted by Multibagger > 2021-09-20 08:47 | Report Abuse

@observatory, dragon328. You are most welcome. We are doing our part to provide more info and view to fellow shareholders, with the hope of helping all of us to evaluate whether this offer is fair .

Posted by hpcp > 2021-09-20 08:50 | Report Abuse

"Where any of the terms of the Offer are revised, Holders who have previously accepted the Offer shall also be entitled to receive the revised consideration that is to be paid or provided for the acceptance of the Offer. The Offer may not be revised after the 46th day from the Posting Date"

But if you sell in the open market, you are not entitled for revised offer price in case there is one. Those owning Daibochi should just wait and see. Still can accept the offer or sell to the market one or two days before the offer expires should there be no extension.

Posted by Bgt 9963 > 2021-09-20 08:56 | Report Abuse

Going to revise the price...

Posted by observatory > 2021-09-20 12:11 | Report Abuse

Preying on Fear - Pirates of the Dai-bo-chi
https://www.apolloinvestment.com/F210916.htm

Couldn't put it better than Claire Barnes of Apollo!

Today filing shows that Apollo has further bought 1.6 million warrants. Its share of total warrant has increased from 9.4% to 15.3%, more than Scientex's latest control at 11.4%.

Posted by Syndicates > 2021-09-20 14:38 | Report Abuse

if scientx is keen to privatise, i think revise offer price is likely. second largest shareholder is also collecting, if warrant is converted, he owned more than 10%, which in turn scientx couldn't collect more than 90% if second largest shareholder reject the offer. he's not included in PAC with scientx, by far

Posted by dragon328 > 2021-09-20 16:11 | Report Abuse

@observatory, thanks for the article by Claire Barnes of Apollo. It clearly reinforces our view that Scientex's offer price is too low.

"It has chosen to attempt privatisation, not by offering a compelling price to encourage willing sellers, but by emphasizing that companies can be delisted and it would do nothing to prevent this - although with this offer it seems unlikely to reach the level of voluntary acceptance required for compulsory acquisition. Fear can feed on itself, so investors should not relay uncritically the storyline that delisting is inevitable.¹ "

Posted by Multibagger > 2021-09-21 06:41 | Report Abuse

@observatory, thanks for sharing the Apollo's article.
Scientex may be considering clause 4.5 (b) now : )

Posted by iknownuts > 2021-09-21 13:07 | Report Abuse

Apollo has accumulated the following since the offer was tabled:

15/9 - 524300 shares
17/9 - 1606800 warrants
20/9 - 728600 warrants

As of yesterday, Apollo’s total warrant holdings is 18% of the entire float. This morning session another 675100 units were transacted. These are big volumes considering there are not many warrants in circulation.

Apollo is definitely bullish on the prospect of this company, and optimistic on a revised offer coming in. Buying into the warrant also gives the highest returns percentage wise. Perhaps this is the reason they stopped buying shares?

Posted by Zackmeiser > 2021-09-23 18:05 | Report Abuse

Clearly undervalued at Rm2.7 with good growth prospect. I would hold and ride the privatization wave. Probably add some too now and then.

Posted by observatory > 2021-09-24 12:18 | Report Abuse

Scientex's ownership of Daibochi shares:
Date Holding Changes
Start 61.88%
14-Sep 64.22% 2.33%
15-Sep 64.58% 0.37%
17-Sep 65.32% 0.74%
20-Sep 65.61% 0.29%
21-Sep 65.88% 0.27%
22-Sep 66.02% 0.14%
23-Sep 66.07% 0.05%

The acquisition pace has slowed down considerably. There are few sellers now.

Meanwhile, Apollo and Samarang have slightly increased their share holdings from 5.06% to 5.10%, and 9.38% to 9.54% respectively.

But that is not the full picture. For defense, warrants can be converted to shares. Now consider the scenario where all warrants are converted. The maximum number of shares will be 327.372 million + 27.297 million = 354.669 million. Under this scenario, Scientex's ownership will be

Date Holding Changes
Start 57.45%
14-Sep 59.94% 2.49%
15-Sep 60.49% 0.55%
17-Sep 61.17% 0.68%
20-Sep 61.45% 0.28%
21-Sep 61.71% 0.25%
22-Sep 61.83% 0.13%
23-Sep 61.88% 0.04%

And Apollo's position will be

Date Holding Changes
Start 9.38%
14-Sep 9.38% 0.00%
15-Sep 9.53% 0.15%
17-Sep 9.98% 0.45%
20-Sep 10.19% 0.21%
21-Sep 10.19% 0.00%
22-Sep 10.19% 0.00%
23-Sep 10.19% 0.00%

Therefore by 20-Sep Apollo has already crossed the 10% necessary to deny Scientex's from acquiring above 90%. It has stopped buying after the date. This may have to do with the common practice where funds do not own more than 10% of shares in a company.

The buying above RM2.70 (for shares) and RM0.32 (for warrants) have come from investors other than Apollo, Samarang and Scientex.

Posted by dragon328 > 2021-09-24 18:11 | Report Abuse

Good observation.

Scientex is stuck for now with <70% stakes in Daibochi. What is it going to do next?

I think we will have to wait till Daibochi quarterly result is out next week to gauge what will happen next.

Posted by observatory > 2021-09-25 11:08 | Report Abuse

As predicted last Sat, today The Edge comes out with yet another article on Daibochi. This time besides quoting the view of Scientex controlling shareholder Lim PJ, and the private investor and former investment banker Ian Yoong who last week used the pandemic year earning to reach his "12X EV/EBITDA fair value at RM2.70", The Edge also gives the space for dissenting shareholder Claire Barnes of Apollo.

Claire Barnes said "We took the view that if Scientex wishes to increase its stake at RM2.70, and the best-informed investors see good value here, it's also a buying signal for other investors who have less information ...
We agree with Scientex that the company represents excellent value at RM2.70, and hope that it will remain listed -- as per the assurance given by Scientex when it first bought the shares."

Well done for a more balanced reporting.

Posted by observatory > 2021-09-25 11:18 | Report Abuse

Claire Barnes also said "We found it very odd to read reports from brokers and press that appeared to assume this as given..."

I agree. For example, Dagang News looks silly now for not only regurgitating the hastily changed opinion from CIMB, but further portraying Scientex as a hero. What a joke.

https://dagangnews.com/scientex-grabbing-bull-its-horns-9056

Posted by dragon328 > 2021-09-25 17:15 | Report Abuse

Perhaps I will go and grab a copy of The Edge tomorrow just to see this article if you say it is a more balanced reporting.

Anyway looking at the drying volumes in past 2 days, I do not think Scientex will even get its stakes in Daibochi up to 75% by the end of the 21 day offer period.

Will continue sitting pretty to wait for Daibochi next quarterly results (not much to expect from the July one but Oct one will look interesting) and the next move of Scientex after it fails in its illy-planned privatisation attempt.

Posted by Syndicates > 2021-09-28 13:19 | Report Abuse

where is your promised at least 30% of income as dividend?

Posted by Bgt 9963 > 2021-09-28 13:20 | Report Abuse

Under value...should revise the offer price...

Posted by dragon328 > 2021-09-28 14:23 | Report Abuse

As expected Daibochi reported a poor Q4 result but it is not as bad as feared. Revenue dropped about 10% q-on-q and gross profit fell by a larger percentage.

Adding back depreciation & amortisation of RM6.2m and forex loss of RM2.3m, EBITDA was not too bad at RM13.6 million though EBITDA margin still dropped from typical 12%-13% to 10%.

Post-tax operating cash flows for the whole year was still commendable for a wash-out year at about RM70 million before working capital changes and capex. Capex spent plus deposits made totalled RM64 million, about 2/3 of its planned RM100m expansion.

The ongoing privatisation attempt by Scientex may have disrupted Daibochi's operations and expansion plan, in the way that the target company might not be allowed to show any big improvement in cost optimisation (raw material supply by Scientex, forex management, etc.) and be forced to push back any expansion effort in acquiring new customers. If this privatisation offer drags on for another few months, then we can reasonably expect the Q1 FY2022 result of Daibochi to be muted as well.

Posted by dragon328 > 2021-09-28 14:35 | Report Abuse

It came as no surprise that Daibochi did not declare a final dividend. Naturally it will keep all the cash until Scientex accumulates enough of its shares and its capex plan is complete.


Posted by Syndicates > Sep 28, 2021 1:19 PM | Report Abuse

where is your promised at least 30% of income as dividend?

Posted by dragon328 > 2021-09-28 14:37 | Report Abuse

Expect CIMB to lower its target price for Daibochi further to RM2.70 or below tomorrow after this "managedly" poor quarterly result.

The idea is to encourage more retailers to sell their shares to Scientex at RM2.70 but I do not see any big panicked selling yet.

Posted by Syndicates > 2021-09-28 14:46 | Report Abuse

it this your way to threaten the shareholders who is loyal to you?

Posted by observatory > 2021-09-28 15:26 | Report Abuse

@dragon328, thanks for the analysis.

Yes, it's not as bad as feared given the quarter experienced many operational disruptions. I've expected earlier that they may do some impairments given this is also the last quarter of an eventful FY21. But that didn't happen. Still can't rule out in next quarter especially with the Myanmar operations.

@Syndicates, one possibility the management didn't declare dividends is not to complicate Scientex's privatization. According to Clause 4.1, any dividend within the offer period will be deducted from the offer price later. It may create unnecessary confusions and angers among shareholders who accept the offer and later find out they receive less than RM2.70.

If my guess is right, the dividend may be declared in the following quarter instead.

Posted by Syndicates > 2021-09-28 17:03 | Report Abuse

it should declare this quarter as the next quarter will be new financial year. and they assumed scientx to privatize this company, means the dividend that should be distributed must do it now. they ate the dividends as well with the privatization

Posted by Investor420 > 2021-09-28 17:13 | Report Abuse

Lol, so much fuss within the ikan bilis here, just sell daibochi and switch to Scientex, then you own full daibochi and Scientex. The funds will have liquidity issue to swap but not you for you all. Pretty sure the idea behind the privatization is more strategic rather playing the cronies privatize low, relist high trick. All of you here arguing to have a higher valuation seems the be the petty one imo.

Posted by Investor420 > 2021-09-28 17:18 | Report Abuse

Personally long term holder of Scientex and bought some daibochi together with Scientex takeover in 2019, now sold and swap to Scientex, as long as MR PJ LIM is steering the wheel, I will just follow him, so far proven never disappointed!

Posted by observatory > 2021-09-28 17:42 | Report Abuse

@Investor420, your logic is flawed.

The funds have liquidity issue to swap also means they have liquidity issue to sell Daibochi in the future if they don't take Scientex's offer now (they can easily invest the proceeds in stocks other than Scientex).

Yet the funds not only hold out, but have increased their holdings, doubling down their bets.

And now a smart alec comes here to ridicule other retail investors while getting his own logic wrong?

Posted by dragon328 > 2021-09-28 18:02 | Report Abuse

If you are a shareholder of Scientex, you will naturally argue that the privatisation offer is good and strategic for Scientex. But how would it be more strategic for Scientex in wanting to own 100% rather than 62%?

If Scientex is not able to improve Daibochi financial performance while owning 62% of its stakes, what difference would it make by owning 100%?

It would be good for Scientex only if Mr. Lim sees huge potential in Daibochi itself and the privatisation offer at RM2.70 per share would be earnings accretive to Scientex.

We do not dispute the great stewardship of Mr. Lim in making Scientex a successful company. But we just hope that in driving the success of Scientex, he does not undermine the value of its subsidiary and the effort of the management team, as well as creating many dissenting shareholders. It is not good for Scientex and Daibochi in the long run.



Posted by Investor420 > Sep 28, 2021 5:13 PM | Report Abuse

Lol, so much fuss within the ikan bilis here, just sell daibochi and switch to Scientex, then you own full daibochi and Scientex. The funds will have liquidity issue to swap but not you for you all. Pretty sure the idea behind the privatization is more strategic rather playing the cronies privatize low, relist high trick. All of you here arguing to have a higher valuation seems the be the petty one imo.

Posted by Investor420 > 2021-09-28 18:19 | Report Abuse

@observatory your logic is based on the funds are rational, to me, they are acting emotional as I don’t think they are “tipped” beforehand and the privatization news is dropped to them same time like you ikan bilis-es. Boy oh boy you never see how Scientex grow for the past 20 years do you? I mentioned liquidity issue is that even if the funds want to continue this daibochi growth, they can’t just easily buy up that block of Scientex as Scientex is quite illiquid if you want to buy in 8-9digit sum. They think by challenging for the sake of challenging, they would gain something out of it, time will tell, but either way, why stress yourself out going against the giants when there is a much much easier route, which I mentioned, with almost guarantee a better outcome. Welp, you do you, I guess some ppl like the challenge in life, and some, like me, always go with the easy route.

Posted by Investor420 > 2021-09-28 18:33 | Report Abuse

@dragon errr, they did improve, performance so much better under the management of Scientex. Why they privatize, what’s the true intention, I do not know also but I’m pretty sure it’s way beyond the undervalue petty valuation play. I guess if you manage a company, it’s much easier to do things privatize, I believe under PJ Lim, it’s for the greater good, or Scientex wouldn’t have this run for the past 20 years since Pj lim is in the steering wheel, they would have privatize mid way, or go for easy money, rather than growing the company continuously for the past 20 years, it’s not easy, talk to someone in the scene, and you would know it’s remarkable, and holding Scientex, I believe PJ Lim is not the type who would cheat his shareholder, unlike *cough cough* V……..
Ofc with 2.7, there is room to go up, if not why do they want to privatize? Again, it’s undervalued, but fair. Besides, you can still own daibochi by buying Scientex, why so stubborn and let your ego drive you, anyway, seems to me such an easy way out, but so many stubborn investors. Privatization falls through or not, was a good sidetrack trade/investment for daibochi 2019-2021, handsome gains. Looking to continue grow with Scientex to newer heights!

Posted by dragon328 > 2021-09-28 19:25 | Report Abuse

I do not really see any improvement in Daibochi operations since Scientex took over control in 2019. @Investor420, please highlight the areas of improvement to us.

Quarterly revenue has been around RM150 million in past few quarters and EBITDA margin around 12%-13% since 2019, dropping to just 10% in the latest Q4. Scientex has been supplying the raw materials to Daibochi before and after it acquired a controlling stake in the latter, but we do not see much synergy nor cost savings achieved by Daibochi since 2019, some more incurring forex loss over RM2.3 million in this Q4.

Posted by observatory > 2021-09-28 20:11 | Report Abuse

@Investor420,
First you argued that retail investors, your so called billis, should just sell and switch to Scientex. BTW you're not the first to argue it here.

When pointed out that your "big funds are restrained by liquidity" logic is wrong, you then argued, based on your speculation, that big funds are acting emotional. Oh I'm so sorry for their shareholders!

Then you put forward yet another argument "you don't see how great Scientex has been for the past 20 years", as if other investors don't know how to read share price charts.

Unfortunately your new logic is akin to Top Glove offering 10% higher than today market price to acquire Kossan or Supermax, arguing that Top Glove has been the greatest company for the past 20 years and therefore the smaller ones should sell.

If the great can always acquire the not so great at an undervalued price (your own words to dragon328), then Bursa will be left with just one company. The greatest one would have swallowed up all the not so great ones.

Actually the not so great Daibochi's share price has appreciated more than 1,200% over 20 years, split adjusted and dividends excluded. What Claire Barnes of Apollo in her blog, and myself too, have argued is that if Scientex is unwilling to offer a fair price, why don't it just leave Daibochi listed? We're happy with Daibochi's organic growth. Why the desperation?

Curious to see in your user profile that, as a self proclaimed Scientex investor, the i3 account has been created today. The first comments were to advise Daibochi retail investors to sell.

Posted by observatory > 2021-09-28 20:12 | Report Abuse

Given Daibochi quarterly results today aren't so bad, and given only a miserable 193k of share (0.06% of total) changed hand after the results announcement, expect to get more advocacy for selling in the coming days!

Hope next time they will be backed with better logic.

Some valuation exercises would be good.

Posted by dragon328 > 2021-09-28 20:18 | Report Abuse

Nobody is saying Mr. Lim cheating his shareholders. It is in fact a remarkable achievement of him building up Scientex in the past 20 years.

The key point here is that the privatisation offer price is too low and not fair to Daibochi shareholders. Time will tell if Scientex will succeed in this privatisation exercise, but looking at the declining volumes of shares it managed to gather from the open market in past few days, I expect it to fail.

The fact that other funds like Apollo and Samarang are increasing their stakes in Daibochi at and beyond RM2.70 simply shows the increasing difficulty of Scientex getting even close to 90% stakes at this price.

To me, if Mr. Lim sees good value and potential of Daibochi, he should revise up the offer price to a better valuation of RM3.00-3.30 level to get to a win-win situation with the stakeholders. If funds like Apollo and Samarang are willing to part with their long term holdings of Daibochi shares, then he will know he has got a fair valuation.

In running the business over long term, he cannot win it all. He will not be able to grow the company if there are many dissenting shareholders and management personnel at the subsidiaries. He should be using the might of Scientex to help Daibochi in negotiating good deals with its MNC customers, and not taking advantage over minority shareholders.

Posted by Investmon > 2021-09-28 20:41 | Report Abuse

interesting dialogue here! I am a Daibochi shareholder, and not sure if I should accept the offer of RM2.70, so I came here to hear what people say. wow, the discussion is excellent for me. Thanks!

One thing to observe, I think @investor420 is a Scientex mole, hahaha

Posted by observatory > 2021-09-28 22:54 | Report Abuse

@Investmon, welcome to this discussion thread.

I'll refrain from saying anyone here has an ulterior motive. I'm just amused on why a typical Scientex shareholder will be overly concerned about the success of Daibochi's privatization. After all, as a subsidiary of Scientex, Daibochi's earnings are already rolled up to the parent's level and Scientex enjoys 2/3 of the fruit. According to Kenanga, even with 100% acquisition, the earnings accretion of this deal to Scientex is only 5%. If I were a Scientex shareholder I will rather pay more attention to issues like what does rising building material costs mean for its affordable housing segment, just for example.

Anyway for full disclosure, as you may have already guessed, I'm a Daibochi shareholder who will rather hold on for the long term unless the offer price is revised much higher to reflect Daibochi's long term growth potential. So my position is definitely biased. And I certainly hope that other minority shareholders will also reject the current offer and that my shares cannot be compulsorily acquired (compulsory acquisition is dead now anyway).

But still I welcome contrarian opinions, based on numbers and good reasonings, on why Daibochi should not be worth a lot more as I believe. A valuation exercise to show the contrary will be a good starting point. A healthy debate can help us to discover and estimate Daibochi's intrinsic value. It can be more useful than those independent advisor's exercise (TA has been appointed) that will come up with those "fair and reasonable" or "not fair but reasonable" conclusion.

Posted by Investmon > 2021-09-29 10:10 | Report Abuse

@observatory, thanks for the comments. I think both views have merits, including that of @investor420.

right now I see a long protracted 'battle' between the controlling shareholder and the minority institutional funds. and who knows what the share price will be after the offer lapse. I think I'd better take the offer and use the money to look for some other packaging stocks like BPlas or SCGM that pay dividends.

Posted by observatory > 2021-09-29 11:12 | Report Abuse

@Investmon, you're welcome. I agree switching to another pure play flexible plastic packaging stock is a viable option too.

For me I feel that the short term reward of revised offer from Scinetex within the offer period (may extend to 60 days) is roughly balanced by the risk of offer lapse (price declines but still above pre-announcement level if players including Scientex buy on dip).

On balance, as I'm more focused on the longer term, I decide not to get out and in again. Besides my average holding cost is rather low. So I agree there is no standard answer as it all depends on individual's risk profile, holding period and level of conviction.