Bursa Malaysia: TOMEI CONSOLIDATED BHD (7230): Review March 2010

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TOMEI CONSOLIDATED BHD TOMEI (7230)

First of all, let's see some latest news of TOMEI from Bursa Malaysia:

01/03/2010
Subject:TOMEI CONSOLIDATED BERHAD ("the Company")
- Compliance with Public Shareholding Spread Requirement pursuant to Paragraph 8.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("MMLR")

Contents:
The Board of Directors of the Company is pleased to announce that the public shareholding spread of the Company as at 1st March 2010 was 28.55% and therefore, the Company is in compliance with Paragraph 8.02(1) of the MMLR.

Comment:
Public Shareholding Spread:
1. A listed issuer must ensure that at least 25% of its total listed shares (excluding treasury shares) or such lower percentage of shareholding spread as may be allowed by the Exchange, are in the hands of public shareholders
2. The public shareholding spread of a listed issuer is 10% or less of the total number of listed shares (excluding treasury
shares) (“Threshold”), a suspension will be imposed by the Exchange.
(Source: http://www.bursamalaysia.com/website/bm/regulation/rules/listing_requirements/downloads/bm_main_pn19.pdf)

25/02/2010
Types of corporate proposal:Private Placement
Details of corporate proposal:
PRIVATE PLACEMENT OF 12,600,000 NEW ORDINARY SHARES OF RM0.50 EACH IN TOMEI CONSOLIDATED BERHAD ("PLACEMENT SHARES") AT AN ISSUE PRICE OF RM0.50 PER PLACEMENT SHARE ("PRIVATE PLACEMENT")

Comment:
"What Does Private Placement Mean?
The sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.
Investopedia explains Private Placement
Since a private placement is offered to a few, select individuals, the placement does not have to be registered with the Securities and Exchange Commission. In many cases, detailed financial information is not disclosed and a the need for a prospectus is waived. Finally, since the placements are private rather than public, the average investor is only made aware of the placement after it has occurred." (Source: http://www.investopedia.com/terms/p/privateplacement.asp)

Next, let's do some analysis about its last few years financial performance:

Fundamental Analysis: (Weighted average number of ordinary shares: 126,000,000 with par value RM0.50)
                Total Liabilities    Total Asset         Gross Profit      Profit for the financial year   EPS
2009          133,371,000           262,083,000        104,126,000       18,880,000                          14.48
2008          129,322,907           242,323,780         90,958,745        15,506,854                          12.04
2007          132,918,403           234,628,829         71,240,896        12,735,601                           9.77

Dividend
2009 
2.5 sen per ordinary share less 25% Income Tax in respect of the financial year ended 31 December 2008 (04/05/2009)

2008 
5.0 sen per share less 26% Income Tax in respect of the financial year ended 31 December 2007 (30/04/2008)

2007 
5.0 sen per share less 27% Income Tax in respect of the financial year ended 31 December 2006 (30/04/2007)

            (Total Liabilities)/(Total Asset)
2009          0.5088
2008          0.5336
2007           0.5665

The ratio of total liabilities to total asset is increased gradually from 2007 to 2008 is a good sign. Nevertheless, few things should be aware about:
1. Ability to pay off its current liabilities is decreased due to increasing inventories. This should be not an unexpected during the economic crisis. Again, please notice about what kind of inventories for this company. Are the inventories will increase their value after years? (Gold, of course)

(2009) = current assets minus inventories by current liabilities
= (244,472 - 216,420)/ 122,075
= 0.2298
(2008) = current assets minus inventories by current liabilities
= (221661 - 195776) /107557
= 0.2406
(2007) = current assets minus inventories by current liabilities
= (158234 - 127370) /80184
= 0.3849

"What Does Current Liabilities Mean?
A company's debts or obligations that are due within one year. Current liabilities appear on the company's balance sheet and include short term debt, accounts payable, accrued liabilities and other debts.
Investopedia explains Current Liabilities
Essentially, these are bills that are due to creditors and suppliers within a short period of time. Normally, companies withdraw or cash current assets in order to pay their current liabilities.
Analysts and creditors will often use the current ratio, (which divides current assets by liabilities), or the quick ratio, (which divides current assets minus inventories by current liabilities), to determine whether a company has the ability to pay off its current liabilities. "
(Source: http://www.investopedia.com/terms/c/currentliabilities.asp)

Now, market price of TOMEI is around 0.535 to 0.54 with RSI of 33 (13/4). Invest it if you believe its sales will increasing with the economic recovering. Besides, if the purchase price is 0.55 with minimum 0.025 dividend per year, the interest rate is 4.55% which is still higher than current fixed deposit return.

Reference:
http://www.tomei.com.my/en/financial_results.htm
http://www.klse.com.my/website/bm/listed_companies/

Note: All contents shall not be treated as a recommendation but are solely the opinions of the author. Any action that one taken as a result of information from this site is ultimately ones responsibility. Consult your investment adviser before making any investment decisions, if necessary.

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Written by: Xaivier Chia

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