$CANONE / 5105 (CAN-ONE BERHAD) is having a very eventful year. Apart from the stock being up 90% YTD, it had took over $KIANJOO / 3522 (KIAN JOO CAN FACTORY BERHAD) private and recently sold off its subsidiary F&B Nutritient for RM 800m- RM 1b. So it was just natural that I went to its AGM to see what's in store next.

Along with other shareholders, the big cat in the bag for me, is to find out the "NEW" Can-One, its new business model, what to expect out of this. How much will be missed EBITDA wise & interest savings from the sale of the food product division, and what is the future from the packaging business now that it's owned by them in entirety - see if it can "replace" what is lost from the sale.

The following are discussions highlights from the AGM, from my point of view.

1) All questions with regards to the sale of food product division via F&B Nutritient will be deliberated to an upcoming EGM.

2) One of Can-One finance directors highlights that disposal of F&B Nutritient will "cost" the company about RM 80m EBITDA (2018), but this opportunity cost is offset as Can-one will get back about RM 800m cash. In addition, they will also gain about RM 200m + EBITDA from full take up of Kian Joo.

3) Kian Joo is in the business of tin, aluminium and carton box, while Can-One is in business of tin and dairy business (with small property segment)

4) On synergy & capex - the management is looking well into streamlining exercise, to identify area that can do better synergy and to convert it to value. Management also mentioned that KianJoo committed capex for expansion, and this is not necessarily a bad thing as it's an opportunity to build more business.

5) In the terms of disposal of F&B Nutritient, there is and will be a "relationship" agreement - to ensure that any prior businesses done for the supply of can from Can-One to F&B Nutritient will continue, that F&B Nutritient will continue to buy from Can-One in the long term. This is good.

6) I asked about what is the expectation from KJCF in the future, on whether its earnings can go back to its glory days in 2014-2016. And about its cost structure - as many raw materials such as aluminium and paper prices had came off recently, whether that will have improve on future margins.

Management answered that they hope they will go back to KJCF glory days, and they think they are in a good spot, as they're now a regional player. On raw material prices, Can-One have a team that review prices of raw material and lock them in if they think its low enough. Additionally there's a 2-way mechanism where they can pass through cheap / expensive raw material prices to their customers.

7) Mr Yeoh Jin Hoe then spoke. He summarised everthing. You can tell right away, he's "the boss". This is what he had to say...

a) The company in good stead to reorganise the Can-One business.
b) They had built their F&B dairy business from scratch and sell it at a reasonably good price to the PE guys, which they decided to embark
c) For the sale of F&B Nutritient, there are still a number of conditions they need to fulfill. EGM will happen for the approval of disposal from the shareholders.
d) The industry, he says that with current economic situation there are certain benefits and opportunities but also some downside... Opportunity stems from the ability to take on other competitor, but at the same time, Malaysia also had opened up for foreign company to come in to run for their money
e) It's a competitive industry... Coke, Pepsi, Heineken, Nestle, they talk to everyone. And recently, there's a new thing called "e-tender", where you hae got to go in with the best and lowest bid. And post tender, there's still room for customer to press the price down again. They dont let u go, if they raw material price come down, that will be a reason for them to press their price down too.
f) Can-One have very strong relationship with clients but they're not giving extra margin, however, Mr Yeoh ensure that the team is on top of that
g) Fluctuations of raw material prices such as aluminium, tin, labour costs, it's a challenge that they have to manage.
h) He mentioned that they have competitors from everywhere, Indonesia China, all big names - hence they also need to spend money to automate, to be efficient to increase productivity else others will overtake.
i) Mr Yeoh says that Can-One will continue to do the best they know how.
j) Offer from PE guys was good, they will be looking to pare down borrowing and distribute any access via dividend.

Overall, it was a good informative AGM. Alot are still up in the air, but at the very least, I get the feeling that Mr Yeo Jin Hoe and his team believe that the deals that they had done this year are "good deals".