Venue: Suntec Singapore International Convention & Exhibition Centre
Time & date: 1.30 pm, Apr 28.
BRIGHT WORLD PRECISION MACHINERY is an S-chip which has the unusual distinction (among S-chips) of not only paying a dividend for FY 09 but a very generous one.
The dividend is RMB 0.15 a share, or about 3 Singapore cents. Its announcement of the dividend on Mar 1 has since triggered a steady increase in the stock price from 19.5 cents to as high as 30.5 cents before easing to 28.5 cents yesterday (May 5).
At 19.5 cents, the dividend yield was a massive 15%. The stock goes xd on Monday, May 10.
The dividend amounts to RMB60 million. Is that stretching things a bit considering that the cash in the company’s bank account as at end-2009 was only RMB57 million?
This was among the questions raised at the AGM last week.
A day after the AGM, the company announced a set of sterling Q1 results and, notably, the cash balance had ballooned to RMB88 m.
Other key figures from Bright World, which manufactures stamping machines (and interestingly was the subject of a takeover offer in 2008 at 70 cents a share):
* Revenue shot up 109% year on year to RMB187 m.
* Net profit attributable to shareholders jumped 244% to RMB27.3 m.
Here are highlights of the Q&A at the AGM:
Q What is the current status of the cash in the bank versus the dividend payout? What other bank borrowings does the company have and will the company have sufficient working capital?
Wang Wei Yao (non-executive chairman): Not likely to have any problem. The working capital is sufficient for the current purpose. The bank borrowings will be paid back on time. We also have additional bank facilities we have not utilized yet, so the working capital will be sufficient.
Q: Regarding the trade receivables: In the past few years, it has increased significantly, accounting for more half a year’s worth of sales in FY09. Can you provide the aging profile of the receivables?
Samuel Ng, Chief Financial Officer: Page 67 of the annual report gives the aging profile. The company has assessed the receivables and confirm that they are collectible. Due to the economic downturn, we have extended the credit to these customers which prolongs the collection period.
Q: How many customers? Is there a concentration of risk?
Samuel Ng: No concentration. We have over 1,000 customers.
Q: I find it hard to believe that the RMB61 million trade receivables which are ‘past due over 6 months’ – there is no impairment risk there.
Samuel Ng: The auditor has assessed these to be alright. There is a specific allowance for impairment loss for RMB 11.7 million of other trade receivables.
Q: On page 55 of the annual report, there is this figure of RM13 m in ‘advances to employees’, which are unsecured, interest-free and repayable on demand. Can someone explain the details of these advances?
Samuel Ng: These are advances to sales personnel around China. They need cash when they travel for a month, or two or three months before returning to the company. The money is for their expenses.
Q: Can the chairman elaborate on the reason for the generous dividend? The bank balance is not very much (RMB 57 million) but the dividend is RMB60 m.
Wang Wei Yao: We can afford it. All the major capital expenditure has been done in the past couple of years. Going forward, there won’t be a lot of capital expenditure and our business volume will improve as the economy recovers.
Q: Can the management provide an update on the business environment because I see some of your competitors have a remarkable turnaround?
Wang Wei Yao: Business is not bad. We are quite busy. If you wait a few more days, you will know our first-quarter numbers.
Q: Last year, the company spent a significant sum - RMB108 m - in capex. Can you tell us what the plan is for this year?
Wang Wei Yao: There will be some instalment payment (RMB 4.4 m) for last year’s new facility, new assets. For this year, the capex is to support continuous improvement in production. It is not going to be a big amount.
Q: Does that mean there will be another good dividend again?
Wang Wei Yao: It’s too early to say. Let’s look at the performance of the second half of the year and the board will make a decision at the end of the year.
Notably, at the AGM in April 2009, a sum of S$340,000 was approved for the Directors' fees for the FY ending Dec 09 to be paid quarterly in arrears. The actual payment was S$220,000 after the Directors agreed voluntarily to take a lower fee in consideration of the company's financial position and the difficult business environment. In the AGM last month, the directors' fee of S$220,000 for this current FY was approved.