Image Venue: Suntec International Convention and Exhibition Centre
Time & date: 10 am, Apr 22.


NOT A single question was asked during Ziwo's AGM, which was attended by only a few shareholders - which is a pity considering that Ziwo's business is in the midst of high growth and it has patents for its products.

The low turnout could be because Ziwo is a relatively new listing, having made its debut on the Singapore Exchange in October 2009 – that’s just six months ago.

Its annual report states that it has 726 shareholders.

A check of the top 20 shareholders throws up interesting backgrounds, such as:

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Ziwo has just become China's only producer of material for making bullet-proof vests. Photo: Internet

a) Goh Soo Siah, executive chairman of Allgreen Properties, is No.4 largest shareholder with 7.8 m shares.

b) Jeremy Toh Yew Kuan, a partner of auditor firm Deloitte & Touche in Singapore, is No.16 with 1.3 m shares.

Apart from its track record of rising profit and revenue, the company has a product that catches potential investors’ attention quickly: its proprietary material for the manufacture of bullet proof vests.

Ziwo recently achieved the state-level Class 3 standard for its material, which means it is qualified to supply bullet-proof vests made with its proprietary material to the security forces in China and globally.

Last month (March), it announced its first order worth RMB670,000. The end-customer is a foreign government, according to what I learnt after the AGM. Of course, Ziwo can't wait to clinch orders from its own government.

According to Ziwo's annual report, there are only four manufacturers of such material globally, the two largest being Dupont (Kevlar) and Teijin (Twaron). There is no Chinese manufacturer for now, and domestic demand depends fully on imports.

For its first batch of bullet-proof vests, Ziwo intends to outsource the production to a local company.

This looks to be a promising revenue stream for Ziwo but for this year, most of the revenue would continue to be from foamed SBR, high foamed PE and 30D terylene filament yarn.

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At 36 cents, Ziwo stock trades at 5.5X last year's earnings.

These are used in a wide range of applications such as interior roof lining of vehicles, lifestyle consumer products, and furniture upholstery.

Ziwo is in the midst of doubling the production capacity of those three key products.

I learnt that the new machinery would be fully installed by this quarter, so any major boost to sales will only be felt from Q3 ownwards.

UOB Kayhian analyst Allen Jiao is one of only two analysts covering the stock currently.

In a Mar 1 report, he wrote: “Our target price remains at 56 cents based on 5x 2010 PE, which implies a 70% discount to global peers’ average forward PE. MAINTAIN BUY."

CIMB-GK analyst Leong Wei Hao has a target price of 50 cents (adjusted for April bonus issue).

(Note: Ziwo had a 1-for-5 bonus issue in April, which means that the UOB KH target price of 56 cents has to be adjusted to 46.7 cents)


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