FINANCIAL PR, Singapore’s leading investor relations consultancy, took a bold step recently to become the first investor relations firm from Singapore to organise an overseas roadshow for its SGX-listed clients.
Held on 25 October in Hong Kong, the event enabled HK-based fund managers representing 19 funds to meet the management of CMZ, China Sunsine, Super Coffeemix, Time Watch, Labroy Marine and ASL Marine.
Time Watch CFO Tommy Lo (in white shirt, back to the camera): Company has 90% penetration rate of shopping malls in major cities in China. Pic by Joscelin Kwek
Why Hong Kong
According to a recent Morgan Stanley report (“The Last Hurrah”, 17 October 2007), the Hang Seng Index (HSI) is overvalued at 22x P/E versus the historical average of 14x, and is at risk of being affected by a collapse of the A-share market.
The latter is trading at lofty valuations similar to that of NASDAQ before it tumbled in 2000. The HSI tumbled badly in 2000.
Many Hong Kong-based fund managers are looking for alternative markets to invest in. Within Asia, they can consider Taiwan, South Korea, Singapore and India. We believe that Singapore is the best candidate.
In Korea, language would be a problem to most HK-based fund managers as they communicate mainly in English, Chinese and Cantonese. Taiwan’s economy is centred on the technology sector that tends to be heavily subject to global shifts in demand. Its stock market is not cheap, valued at 16x P/E.
Compared to India, Singapore offers strong advantages: it is very accessible and has a large number of China-related companies which will benefit from China’s economic boom and the growing interest in the QDII, or Qualified Domestic Institutional Investor, scheme. The scheme allows Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas.
This is the opportunity that FPR identified. We decided that we would leverage on the FPR advantage – size, regional network and intimate knowledge of our clients – to arrange this event.
According to a recent Morgan Stanley report (“The Last Hurrah”, 17 October 2007), the Hang Seng Index (HSI) is overvalued at 22x P/E versus the historical average of 14x, and is at risk of being affected by a collapse of the A-share market.
The latter is trading at lofty valuations similar to that of NASDAQ before it tumbled in 2000. The HSI tumbled badly in 2000.
Many Hong Kong-based fund managers are looking for alternative markets to invest in. Within Asia, they can consider Taiwan, South Korea, Singapore and India. We believe that Singapore is the best candidate.
In Korea, language would be a problem to most HK-based fund managers as they communicate mainly in English, Chinese and Cantonese. Taiwan’s economy is centred on the technology sector that tends to be heavily subject to global shifts in demand. Its stock market is not cheap, valued at 16x P/E.
Compared to India, Singapore offers strong advantages: it is very accessible and has a large number of China-related companies which will benefit from China’s economic boom and the growing interest in the QDII, or Qualified Domestic Institutional Investor, scheme. The scheme allows Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas.
Sunsine's Executive Director Xu Jun (facing camera): The company is enjoying falling prices of aniline. Pic by Joscelin Kwek
HK fund managers
Hong Kong fund managers are punctual and professional. They ask penetrating questions, and even dispensed opinions and suggestions to the companies that they spoke to.
In conversations I had with some fund managers, they expressed gratitude to us for organising such an event. I’m told there’s a largely unmet demand for such road shows.
One US-based fund manager said it was not easy for US-based funds looking at Asia to figure their way around, and that the fund was contemplating setting up an office in Asia. Another fund manager revealed that fund managers don’t really like to do a lot of cold-calling, so they prefer someone to find targets for them to talk to.
How we selected companies
The theme for this Corporate Day – our third since last year – was “Emerging Leaders in Asia”. As this was the first time we were organising an event spanning two countries, we decided to start on a small scale by inviting only a select group of fund managers and showcasing only a handful of clients.
The companies we chose represent those that are emerging leaders or have the potential to become leaders in their respective fields. The companies were:
ASL Marine: One of the leading ship repair yards in Asia, catering mainly to tankers Floating Storage Offloading (FSO) vessels, jack-up rigs and offshore accommodation barges. ASL owns one of the largest graving dry docks in Indonesia.
China Sunsine: The world’s no. 2 and PRC’s no. 1 producer of rubber accelerators, essential chemicals for the production of all rubber products. Sunsine is an accredited supplier to 9 out of the top 10 international tyre manufacturers, including Bridgestone, Michelin, Pirelli, Sumitomo and Goodyear.
CMZ: A “China Top 10 Zipper Brand” after YKK. CMZ produces mid-
Facing camera are Super's Koh Chun Yuan (Financial Controller, in blue shirt) and Peter Tan (Executive Director). Pic by Joscelin Kwek
to high-end zippers for international brand names like Calvin Klein, DKNY, Guess, Puma, Kappa, etc. Over 40% of its revenue is derived from being the designated zipper manufacturer of renowned apparel brands.
Labroy Marine: An emerging leader in the construction of offshore rigs & vessels. It has one of the largest fleets of tugs & barges in Asia.
Time Watch: Manufactures and retails the famous “Tian Wang”, a top 3 PRC watch brand well known amongst locals. Also carries the “Balco” brand imported from Switzerland.
Super Coffeemix: “Super” is one of Singapore’s and South East Asia’s most recognised F&B brands. Their latest product, 5-in-1 coffee with the usual 3-in-1 (coffee, milk and sugar) plus Tongkat Ali and Ginseng, has been extremely successful.
Action!
The first batch of fund managers arrived promptly at 9.30 a.m at the Regus Business Centre in International Finance Centre 1. About 10 funds met each of the six companies in small-group sessions. We hosted lunch at the renowned Cuisine Cuisine Restaurant at IFC 2 building nearby, kindly sponsored by INVEST Hong Kong. Here are some insights shared by each company.
CMZ: Mr Shao Dajun, a cultured man, brewed special tea from his hometown of Jiangsu for the fund managers. You may say that his attention to detail reflects his business. CMZ’s zippers require 10 steps and 5 components to complete, of which 6 steps are labour-intensive and require very skilled workers. Amazingly, CMZ has only a rejection rate of 0.03%.
China Sunsine: The main raw material for China Sunsine’s product is aniline, a derivate product from crude oil. The good news for Sunsine is that the price of aniline has fallen because of the PRC government’s control on oil prices and an oversupply of aniline in the PRC market.
China Sunsine also revealed that the new product it will unveil at the end of this year – Insoluble Sulphur – will command higher margins of over 30%, due to its more sophisticated production process.
ASL: As of June 2007, ASL has secured a record order book of S$622 million, compared to its FY2006 revenue of S$318 million.
Super: We all know the “Super” brand, but here’s how much it’s worth – an astounding S$51.3 million, according to a valuation done this year by brand consultancy Interbrand. Its products also have widespread appeal – one fund manager even asked for a packet of the special 5-in-1 version.
Time Watch: “Tian Wang” and “Balco”, the two brands that Timewatch carries, have a total brand valuation of HK$151 million! Time Watch also has a 35% share of the local watch market for mid-range watches and a penetration rate of 90% of China’s shopping malls in major cities.
Each Tian Wang watch sells for between 800 and 3000 RMB, while a Balco watch (which is Swiss-made) costs between 1,000 to 4,000 RMB.
We would like to extend our special thanks to Agatha Leong, conference coordinator of the Regus Business Centre, for her excellent service.
