Fujian Zhenyun Plastics Industry

sharing what touzi posted on valuebuddies.com



FJZY's AGM was held last week. The company was granted special permission by SGX to hold its AGM later than the 4 month after FY end rule set by SGX. Since it avoided the end April madness, the turnout was quite good for a small S-chip. Among the attendees are names that appear in the top 20 list ( slightly more than 300,000 shares will send you into that list, so be careful if you are publicity shy ).

The AGM lasted almost 2 hours. Discussion in English were handled by the local directors of the board and the CFO. The chairman did not make it for the meeting, but the rest of mainland chinese of the board took turns to answer questions posed in mandarin (or was translated). Personally I find them confident and forthcoming. The shareholders (many appear to be retirees) while probing were always polite.

A few highlights:

The top non majority shareholder tried his luck and asked that the company be privatized at $0.80 since cash per share is about $0.71.The board told shareholders that they did consider delisting from Singapore and relist in another market. However due to the unfavorable market conditions they did not proceed.

Besides the usual reason of maintaining bank relationship in China, another reason for the bank loans ( despite being cash rich ) is that the company is in discussion on projects that will require more cash. These projects will allow the company to participate in implementation instead of just as a supplier of pipes. The company is also looking at prospects overseas.

There were suggestion from shareholders on bonus issue, share split etc. The board inform shareholders FJZY (the actual entity listed in Singapore) is a china incorporated company. This makes bonus issues and splits difficult because of mainland regulation. Apparently there are only 3 S-chips that are structured in this way ( Tianjin Pharm and another that i did not catch). This btw, was the reason that SGX granted them extra time to hold the AGM.

I am glad I took time off from work to attend this AGM and I believe I speak for many of the attendees as well. At $0.14 current price, the company appeared grossly undervalued. However with this year's dividend of only RMB1.5 cents, it will definitely not appeal to most investors (Though it must be noted that the company pays dividend every year).

It's not uncommon for customers to demand refund when the goods are 'problematic'. Fujian Zhenyun customer wants RMB12.2 million back ...It's not a big amount @ 4.8% of FY13 sales. The products were found 'problematic' at end-customer site in Iraq. IRAQ! Where dubious practices are a daily affair! What do you expect....

sykn wrote: Worth taking a look so long as we remember that we may be skating on thin ice and need a safety rope! Thanks for the update.

Yes, the ice turned out to be very thin. I just hope it's not what everyone fears. The announcement was vague but with a suspension in trading, everyone who is vested will understandably think of the worst.

The odd thing is this company has been paying dividends every year, including 2014 (RMb1.5 cents a share).