Venue: Serial System HQ, 8 Ubi View
Time & date: 10.30 am, April 28
Photos by Tan Mi Lie & Jernice Lee
ATTENDANCE AT AGMs may be on the rise, and certainly there are investors who find these meetings interesting and enlightening, especially when there is a presentation and discussion about business prospects and performance.
Unfortunately, the practice of management giving a presentation of the past year's performance is not widespread.
In some cases, AGMs are concluded in a matter of minutes with all resolutions tabled and duly voted for.
Serial System's AGM over the past weekend was an exception.
Serial's chairman and CEO Derek Goh gave a presentation and encouraged questions from the audience, which included a number of observers (ie, non-shareholders).
For many of them, their attendance was facilitated by the AGM being held on a Saturday morning, instead of a weekday when they would be at work.
Derek Goh covered much ground, including the revenue and profit track record of Serial, emphasising the company's consistent dividend payout and a yield of 6-9%.
After going through Serial's core business of distribution of electronics components, he touched on a relatively new but growing non-core business -- the outdoor LED and billboard advertising display at Orchard Road and Serial's intelligent room infotainment system (IRIS).
The latter is being installed in hospitals and hotels (such as Khoo Teck Puat Hospital), which enables patients and guests, respectively, to control lighting, curtains, air-conditioning -- and check bills and arrange for check out -- all from an iPad.
A related system allows homeowners to use their smart phone as a remote control to manage lighting and air-conditioning. This cool factor could atrract property developers also -- as it could be a marketing tool for their projects.
This sort of insight into a business, and its potential, can only be gleaned from a presentation -- and talking informally to the Right Person which, in this case, was Steven Choo, the COO of Serial Multivision.
Another key person Derek Goh introduced was Peter Ho, who in early 2011 became chairman and CEO of Bull Will Co, which is listed in Taiwan and in which Serial System has a 36% stake.
Peter Ho is an executive director of Serial System and few, if any, AGM attendees knew his credentials prior to Derek Goh's introduction.
Peter Ho was formerly chief procurement officer at Flextronics International, a technology supply chain company with annual sales of roughly US$30 billion.
Since joining Bull Will, he has expanded the company from one factory to six for the manufacture of electronic components. Think about the higher revenue contribution to come.
1Q results, and Q&A
At the AGM, Derek Goh discussed the 1Q2012 results which saw revenue dipping 4% to S$182 million. This was due to the absence of contribution from a subsidiary in South Korea which Serial had sold off last year.
This susbidiary had contributed S$23.1 million in turnover in 1Q2011. If this were excluded from 1Q2011 result, then Serial would have posted a 9% year on year rise in revenue in 1Q2012.
1Q2012 net profit fell 43% to S$1.8 million on higher operating costs, including admin and distribution.
The company is cautiously optimistic of of better performance for the rest of the year.
During the Q&A session, an attendee asked why Serial had not gone ahead to acquire a majority stake in JEL Corp last year after carrying out due diligence.
Answer: Serial weighed heavily the risk of JEL being delisted within a year; the business would not be profitable fast enough; the capital to be committed to bail out and sustain JEL was too high for Serial.
How would Serial increase its working capital if it grew its business substantially in the next few years?
Answer: If the performance and outlook were positive, Serial would have no problem selling new shares to the market, or carrying out a rights issue, for example.
These are the answers in a nutshell, but AGM attendees obtained the full flavour from hearing them in all its fullness. That's yet another reason it pays to attend AGMs.....
In Serial's case, you would also hear Derek Goh's answers -- which are sometimes robust replies in a raised voice -- beefed up by Hokkien expressions which draw laughter from the audience.
For the Powerpoint materials, click here.
Recent story: SERIAL SYSTEM invites you to its AGM - and lunch - this Saturday
Comments
He has also taken care of his shareholders by consistently declaring creditable dividends.
By listing also in Taiwan, his company has to at least pay a dividend of 25% of NPAT as required by the Taiwan Stock Exchange.
We (my wife and I) thought if our SGX were to practise this, then we shall see fewer s-chips defaulting and delisting without making any exit offer to their existing shareholders. A deposit account could be set up for this purpose. In this manner, they could not come up with extensively expensive capital expenditure that simply exhausts whatever net cash they would have had to pay for dividends, etc.
Going forward, I wish Derek and his team greater success in his corporate journey.