SCGM (7247) - 5 Quick Things I Learned From SCGM's AGM 2016

SCGM (7247) - 5 Quick Things I Learned From SCGM's AGM 2016

Another round of AGM!

SCGM Berhad is Malaysia's leading thermo-vacuum form plastic packaging manufacturer. Its products are broadly categorized into Thermo-Vacuum Formed Plastic Packaging & Extrusion Sheets. A picture is worth a thousand words. I think the below image says almost everything about SCGM's operation.

The AGM was held in Johor and it took me about 3.5 hours to reach the hotel. What a chance to get away from my office and recharge myself!

Few months back, I came across SCGM when I was searching deeply for good and undervalued companies. Its financial reports show attractive numbers. As such, I decided to attend the company's AGM this year to know more about its management and future prospects of the business.

Here are the things I learned from SCGM's 2016 AGM:

#1. Dividend payout ratio 

A shareholder asked if the dividend payout ratio will be maintained. Dato Sri Lee Hock Seng, the executive chairman, was reluctant to give a clear answer due to information sensitivity. However, he assured that dividend payout ratio will be at least 40% and hopefully, when things get better, dividends payout will be higher.

#2. Private placement

Another shareholder asked to clarify about SCGM's private placements. Dato Sri Lee Hock Seng said that the current placement is mainly for expansion purposes. The previous placement was sold to 6 to 7 new shareholders.

#3. A bit about expansion

The newly-acquired 19.5 acres of land will take about 2 years to construct. Additionally, SCGM has bought a new factory in Kulai with a built up area of roughly 30,000 sqft. While waiting for the new factories to complete, they are currently renting factory spaces. Besides, the management is also bringing in 4 new machines from the Europe.

#4. Share buyback

The same shareholder questioned about the purpose of getting the share buyback mandate approved last year because there was no buybacks executed. Dato Sri Lee Hock Seng mentioned that SCGM needs to reserve more cash in the company in view of the expansion plans, which requires more than RM100 million.

#5. Directors share acquisitions

The management raised the attention that they are buying SCGM's shares recently.

Just from my observation, the shareholders seemed to be very satisfied about SCGM's achievements and share price performance

SCGM (7247) - 5 Quick Things I Learned From SCGM's AGM 2016