• It's hard to be anything but congratulatory towards Tiong Woon Corp. It has demonstrated resilience and even consistent growth in an industry as competitive as construction -- even through the Covid pandemic. • But if there's one thing it can work harder on, it's that intangible good connection with investors, especially when construction stocks aren't sexy to begin with.  • Investors have not been attracted to this company (market cap: S$125 million), let alone according it a respectable valuation. • At least, one gets that vibe from the Securities Investors Association of Singapore's (SIAS) "interrogation", if you will, in a set of questions for Tiong Woon ahead of its FY2024 AGM on 30 Oct. • Tiong Woon's responses are relatively short and general in nature and ... not something you'd wildly congratulate the company over. But SIAS's questions may well serve as a catalyst for an upturn in the company's connection to the stock market. Read all that below.... |
Excerpts of SIAS questions and Tiong Woon's responses, in a filing on the SGX website on 24 Oct:
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SIAS:
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Company’s Response:
The Board has carefully deliberated on the payout ratio, balancing the need to reward shareholders while ensuring sufficient capital for future growth and operational requirements.
Each option is assessed with regard to its potential impact on shareholder value, financial stability, and alignment with our longterm strategic goals.
The Board remains committed to ensuring that any decisions made are in the best interests of our shareholders while supporting the Group's ongoing development.
| "Specifically, Tokyo Stock Exchange has required companies with price-to-book consistently below 1x to disclose their policies and specific initiatives to improve their valuations." |
(ii) Can the board help shareholders recall if the company has carried out any share buybacks? What are the challenges, if any, of the company carrying out share buybacks?
Company’s Response:
The Company has carried out share buybacks from 30 August 2022 to 12 September 2022 amounting to 400,000 shares.
The Board will continue to consider exercising this option when market conditions and other factors are favourable.
(iii) Has the board considered carrying out any off-market purchases, including an equal access offer?
Company’s Response:
The Board has not considered off-market purchases at this time.
However, it remains open to evaluating this option in the future, should market conditions and other factors make it favourable for shareholders.
| (iv) Stock exchanges and regulators, including Tokyo Stock Exchange and Korea’s Financial Services Commission, have started to ask companies to set up and disclose valuation boosting plans. These corporate value-boosting initiatives are needed as it is recognised that “corporate values” of listed companies have to improve and that the main driver in enhancing corporate value is the company itself. Efforts have been targeted at companies that trade below a price-to-book ratio of below 1. The plans focused on increasing awareness and literacy of the cost of capital, capital efficiency and stock prices of listed companies. Specifically, Tokyo Stock Exchange has required companies with price-to-book consistently below 1x to disclose their policies and specific initiatives to improve their valuations. Could the board, particularly the independent directors, explain the group’s efforts to increase corporate value and improve capital efficiency? Company’s Response: The Board, including the independent directors, is committed to enhancing corporate value and improving capital efficiency. The Board regularly reviews how it allocates the Group’s capital to ensure resources are used in the best way, balancing between growth plans, returning value to shareholders, and maintaining a healthy financial position. |
(v) Apart from acknowledging that there are many external factors influencing the share price, would the board consider disclosing and implementing targeted strategies to narrow the discount gap, thereby creating value for shareholders?
Company’s Response:
The Board recognises that external factors have a significant impact on the share price.
While these factors are beyond the Company's control, the Board continues to focus on strengthening the business fundamentals, improving overall performance, announcing major project awards and engaging with shareholders more actively.
The Board will continue with our efforts in this regard, so as to bolster higher trust and confidence in TWC, align the Group’s strategies with shareholders’ interests and narrow the gap between TWC share price and its intrinsic value.
See also: TIONG WOON -- After 7 years of growing profit, will this stock finally break out?
