Food Empire

[helios]

4. market-uncle has mentioned a good point ... u'll see e impairment can stretch till 150days! however, comparing to '06, there's an improvement made in '07. FE has managed shorten e window days to 91-120days.

Trade receivables are non-interest bearing and are generally on 30 to 90 days’terms, except for sales of raw materials and packaging materials to 2 customers in Russia whose credit terms are 180 days. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

The Group has trade receivables amounting to $21,098,000 (2006: $38,520,000) that are
past due at the balance sheet date but not impaired.

[kennynah]

ok...this one vested....or at least my wife is....

got chance for >$1 in this life time?

[winston]

Anthoni Salim bought 122,000 to raise his stake to 114,405,200 or 21.63%

[kennynah]

is there a regulation limiting a maximum holding % by any one single entity?

[LenaHuat]

ah Ken, there is a takeover trigger point. It's 30% according to the takeover code:

17.8.6 A person or corporation making a take-over bid for a public company must make a public announcement in the newspapers stating the terms of the offer and the identity of the Offeror if information concerning the offer has entered the marketplace or if the Offeror acquires effective control over the Offeree company. Effective control is deemed to be acquired when a person or corporation (together with its related corporations) or persons that it is acting in concert with acquires 30% or more of the voting shares in the Offeree company. Alternatively, the board of the Offeree company must make the announcement if the Offeror has approached it with a firm intention to take-over the Offeree company.

[kennynah]

lena dear....thanks...i was lazy and you pampered me... i enjoyed every moment of it...thanks...

and now back to the less important task....and asking the next question :

>> should the offerer be granted the >or =30% via a done deal, must then this public company be delisted?

thanks.

[LenaHuat]

Ah Ken
For a mainboard listed co, SGX will direct a delisting when the public float falls below 10%.
However, I'm not sure if the the cut-off point is :-
(1) at the trigger point when the 10% is breached or
(2) at the close of a take-over offer

Not sure abt Catalist cos.

[kennynah]

ah lena :

thanks...so, u and i armed with enough money, walk up to starhub, and buy up 30% of their shares...and take controlling power....and still have it listed on the mainboard...

but would temasek sell that to us, is the question? st telemedia is such big shareholder that they can turn down any offer and not be faced with any consequences from the remaining shareholders...

[helios]

5. Got this NRA report released today, for ref.:

Both SuperCoff & FE do not hedge currency risk, FE will start report'g in USD:

Currency Fluctuations. The Group’s sales and purchases are largely denominated in USD, however, other costs and operating expenses are in SGD. Accordingly, sales and profit will be affected by the fluctuations in the US$/S$ exchange rates. From FY08, the Group has begun to report in USD to better reflect the Group’s results as the majority of its transactions are in USD.

6. Payables turnover days of Food Empire is the highest among its peers demonstrating the Group’s better bargaining power against its suppliers. Although both Food Empire and Super Coffemix are in the instant coffee business, their raw material profiles are different. Being vertically-integrated, Super can procure their own coffee powder and non-dairy creamer and they possessed the production capability to manufacture their own instant coffee and creamer for in-house use. This could explain their higher payables and inventory turnover days.

Comparing to Super Coffeemix’s 140-160 days, cash conversion days for Food Empire hovers between 100-120 over the past 3 years. It took the Group about 3.5 to 4 months for the company to receive cash from selling its purchased inventories.

mmm ... i think, this's not a fair claim made on SuperCoffeemix; f i'm not wrong, SuperCoffeemix is ard 60 - 90 days as stated in its financial report'07; SuperCof has even 30days collected as a group trade receivables because of e vertical integration.

which analyst wrote this

[market-uncle]

Just like to bring up a few things I noticed about Food Empire's account receivables and cash flow from operations that seems to call into question the quality of the reported earnings:

# There was a restatement in financial performance in 2004 (due to some accounting changes) and coincidentally, sales started to languish from that year.
# Net Profit, however, held up pretty well, with a particularly huge jump in 2004.
# Since 2004, receivable growth had been outpacing sales growth.
# Cash generated from operations had been lagging behind net profit for all years excluding 2003.
# Since 2006, there is a huge plunge in the percentage of cash generated from operations with respect to net profit, accounting for around 20+%.
# Free cash flow reduced drastically since 2006, partly due to the recent acquisitions.

I wrote about these in a post on my blog:
http://market-uncle.blogspot.com/2008/0 ... ntial.html

Any comments are most welcomed!