Forum Discussion on Sunray

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Subject: Sunray's AGM on 28 July 2004
trojanhorse
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Posts: 6 Registered: 1-5-2004 Member Is Offline
posted on 7-8-2004 at 03:54 PM

Sunray's AGM on 28 July 2004Was at Sunray's AGM and the informal discussion with Mr Hong (Executive Chairman) and noted the following points:1. Company has invested part of IPO's funds for capacity expansion in Guangzhou HQ.2. There could be partnerships in future with MNCs to either be an OEM or distributor (with Sunray's wide distribution networks with the different levels of hospitals).3. Questions were asked about share price performance but Mr Hong is not too disturbed. The mgt believes their business potential will be realised overtime and this will translate to share price performance.4. The recent tightening of credit policies by the China govt is advantageous to Sunray as competitors with weak balance sheets will be eliminated. This will create a growth opportunity for sunray either through expansion through new customers or acqusition.5. The mgt is very focus in their niche business (instead of competing against MNCs of low margin medical products) and this has created a natural barrier of entry.6. The company is also expanding its R&D dept and have a culture of training and cultivating their own talents through tie-ups with top medical university.7. My personal feeling is that the top mgt is very sincere, confident and honest. Mr Hong is very patient in answering questions and even see off all shareholders personally. I view this very positively. Being a shareholder I will want my money in a mgt that I can rely on.8. Lastly, a qn is posted to the Chairman whether he feels that his personal aim/goal has been achieved with the IPO of Sunray: Mr Hong always sets new heights and standards to achieve after targets are met and he wants Sunray to be develop into a well-respected medical apparutus global company.

trojanhorse
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Posts: 6 Registered: 1-5-2004 Member Is Offline
posted on 7-8-2004 at 03:56 PM

Hope that insights from members who attended AGMs can be shared in the forum. To the creation of our Ultimate Portfolio!!

g18
Junior Member
Posts: 20 Registered: 27-4-2004 Member Is Offline
posted on 7-8-2004 at 04:20 PM

trojanhorseThank you for sharing with us.It is a good idea that we share insights that can be gleamed from AGMs and other sources.

Anto
Junior Member
Posts: 15 Registered: 26-4-2004 Member Is Offline
posted on 7-8-2004 at 04:58 PM

trojanhorse,Good piece. I agree with you that members who attend AGMs or EGMs can provide their insights.I too attended the Sunray AGM but did not join the group that was busily talking in Mandarin, which I do not understand.Instead I talked to the independent non executive director who had chaired the meeting in English at the AGM. He is Singapore based Mr Chng Hee Kok. I also spoke to the other independent non executive director, Hong Kong based Chan Kin Sang. Both told me that they look out for any financial irregularity in the running of the company. Chng shuttles between Singapore and China and Chan shuttles between Hong Kong and China. Both are also in Sunray's audit committee, the remuneration committee and the nominating committee. Chng, is presently CEO of NTUC Club. He is also a Council Member and Director of the Singapore Institute of Directors. So he seems ideally suited to do the necessary checks. Chng told me there were many undervalued companies like Sunray in China, but one has to be careful because many of them were weak in management practices. though they have a lot of resources.He said that companies that provided consumer goods and services for the domestic market were good ones to be in because consumers in China have a lot of money to spend. Any tightening of the Chinese economy will not be able to restrict the spending habits of Chinese consumers.Chan is a Hong Kong lawyer who has been appointed an attesting officer by China. Both Chng and Chan are also directors of Peoples Food. Chan expressed surprise that Peoples Food price had gone down in spite of the fact that it had good financials and a good dividends policy.

trojanhorse
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posted on 7-8-2004 at 11:07 PM

Anto,Thanks for the contribution. Independent directors are very important to protect the welfare of shareholders. Thus their background and experience are additional factors investors should consider, esp with the perceived lack of internal controls in China-based companies. But after Informatics, investors will not be so naive thinking only Spore companies are well-run by mgt with high integrity. About your point of consumerism, Sunray's chairman also mentioned that consumer products companies with high margins are earning big bucks. He mentioned beauty products, cosmetics and luxurious products. So companies like Beauty China, Hongguo and Osim comes to mind."A toast to the Ultimate Portfolio!"

Contrarian
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Posts: 20 Registered: 27-4-2004 Member Is Online
posted on 10-8-2004 at 08:52 AM

Celestrial AGMI attended Celestrial AGM in April.The management team did not appear to be patient in taking questions. The team did not appear keen to talk to shareholders. However, they did spend considerable time discussing with SAGE. The chairman / CEO was amongst the first to leave after the meeting.The important point I brought home from the meeting was that soybean supply used by Celestrial is stable, and is not adversely affected by the recent price increases in early 2004 due to the special type of soybean.

kwongmeng
Junior Member
Posts: 36 Registered: 30-7-2004 Member Is Offline Mood: Neutral - are foreign funds coming back to Asia?
posted on 10-8-2004 at 09:55 AM

I do not have vested interest in Celestrial.However, you might want to know that People's Food latest investment is similar to Celestrial and that was supposed to be the largest such entity in China, and is supposed to be 10 times larger than the next biggest group, Celestria inclusive.It may be worthwhile for you to compare between these 2 companies, People's Food is paying a P/E of 7.5X for that company, and that may be a good indication of the current intrinsic value of Celestrial.

DBIS
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Posts: 3 Registered: 26-4-2004 Member Is Offline
posted on 11-8-2004 at 11:38 PM

People's Food soy plant is different from Celestial. Celestial is making protein product for consumers, such as protein powders. Pfood is more on protein isolates for industry such as HTPM.

kwongmeng
Junior Member
Posts: 36 Registered: 30-7-2004 Member Is Offline Mood: Neutral - are foreign funds coming back to Asia?
posted on 11-8-2004 at 11:44 PM

I think the basic protein isolates are manufactured for both operations but I may be wrong. Pfood's purchase may have future plans of making health drinks, etc.

glad101
Newbie
Posts: 1 Registered: 26-5-2004 Member Is Offline
posted on 11-8-2004 at 11:46 PM

Thank you folks.Pretty good stuff. I have yet to figure out the sustainability of high consumer spending in China. My impression of visit to Shanghai is that China is huge in terms of market and competition. Insurgents move very fast also.Keep up the good work.

kwongmeng
Junior Member
Posts: 36 Registered: 30-7-2004 Member Is Offline Mood: Neutral - are foreign funds coming back to Asia?
posted on 12-8-2004 at 02:32 PM

For me, I am thinking about what high consumer spending means?More pork ? - People's FoodMore casual dining ? - Thai VillageMore packaging ? - ChinaFlexMore cosmetics ?More shoes ?You have to make sure that while the pie is growing, the companies are growing its share of the pie. That, I think, is more difficult.

Mug Punter
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Posts: 74 Registered: 28-4-2004 Member Is Offline
posted on 12-8-2004 at 06:41 PM

Trojanhorse, Anto and Contrarian - thank you for your AGM reports.Sunray is increasingly interesting to me as it plumbs new depths (now 23.5 cents). On looking at it, one of the matters which concerns me is the explosion in turnover and profit in the years before IPO:Year ended 31 MarchS$'000 2001 2002 2003 Turnover 5,775 7,691 19,631 Gross profit 3,634 4,523 13,178 Profit from operating activities 538 1,011 8,554 Profit before tax 444 968 8,523 Net profit for the financial year 324 552 7,011 Net profit per Share (cents) 0.14 0.24 3.01 Sunray's recent results appear to be on track, but I note that profitability was minimal a year or so before IPO. What caused a 12 fold increase in profitability on a 2.5 fold increase in turnover between 2002 and 2003? (A temporary niche product or products, change in Government policy/expenditure?) Any one have any ideas? In any event, there must be cautions about the stability/sustainability of Sunray's profit growth.

dingdinghe
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Posts: 7 Registered: 26-4-2004 Member Is Offline
posted on 13-8-2004 at 03:31 PM

From what I observed in China...More pork ? - People's Food- Do rich man there eat more pork? No. More fish and seafood! Pac Andes will do well.More casual dining ? - Thai Village- YES. There franchisees are doing well there.More cosmetics ?- Yes. But they will go for SK II rather than local products, e.g. those by BeautyChina.More shoes ?- Yes. But again, rich people there will definitely give local shoes a miss.--------------------------------------------------------Some more to add:Better education ? - Raffles Laselle. (however that counter is not cheap)Better healthcare ?- SunrayMore mobile phones?- ACCS (again, not a cheap investment)Bigger Condos?- CapLand and KepLandBetter bath tubs and toilet bowls?- Eagle Brand.Warmer Winters?- DevotionMore holidays?- Straco?

setan
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Posts: 14 Registered: 26-4-2004 Member Is Offline
posted on 13-8-2004 at 07:16 PM

More gambling?- Lassetter?More renovation?- Sim Siang Choon

fun_chua
Junior Member
Posts: 20 Registered: 10-6-2004 Member Is Offline
posted on 14-8-2004 at 12:53 AM

If I want to gamble, I will go Genting for a bet "Big" or "Small", so simple without comission cost...GST...etc (In & out at least s$40). Daytrading for most individual investors is win just a little bit, lost is bigger lump sum.Patience is one of the keys to success for investment.Company with good earning growth rate for many years will push its share price up automatically by market.

kwongmeng
Junior Member
Posts: 36 Registered: 30-7-2004 Member Is Offline Mood: Neutral - are foreign funds coming back to Asia?
posted on 14-8-2004 at 04:05 AM

Sunray has just released its results for 1Q and it lloks decent:TURNOVER 26,369 19,574 34.7GROSS PROFIT 17,348 13,291 30.5PROFIT FROM OPERATING ACTIVITIES 10,385 8,505 22.1PROFIT BEFORE TAX 10,349 8,469 22.2NET PROFIT 8,729 7,202 21.2

Contrarian
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Posts: 20 Registered: 27-4-2004 Member Is Online
posted on 14-8-2004 at 09:10 AM

Sunray's AGM on 28 July 2004Yes Sunray results are quite good.My Chinese colleague tell me that there are many hospitals in China. However, there are also many medical equipment suppliers in China, and competition is very keen. So it is definitely the right industry. But I am not sure if Sunray is the right company to invest.The thing I am concerned is there is no recurring income.

kwongmeng
Junior Member
Posts: 36 Registered: 30-7-2004 Member Is Offline Mood: Neutral - are foreign funds coming back to Asia?
posted on 14-8-2004 at 10:27 AM

Yes, the lack of the recurring income is a concern. Perhaps they can tell us whether it can be a blessing in disguise - if the hospitals are not paying them to maintain the equipment, will they fail earlier and then must buy more ? Or maybe they do contact Sunray when something goes wrong, and Sunray can charge more (and earn more) for such ad-hoc problem rectification?Also, I think the competition they face is more specific. They are competing only in the O&G medical equipment suppliers, and are even thinking about distributing equipment from suppliers external to China - but still in the O&G areas. Perhaps they can consider distributing equipment outside this area (since they are visiting and selling to the hospitals anyway), but just concentrate on O&G when developing thei in-house products...