Kian Joo Can Factory Berhad

$KIANJOO / 3522 (KIAN JOO CAN FACTORY BERHAD)

- 10 MA > 20 MA
- Conversion line > Base line
- Currently trading above the Ichimoku Cloud

Wait for breakout, if breakabove the trendline =>
TP3: 2.000
TP2: 1.800 (TP2 and 3 can follow the trend until an exit signal)
TP1: 1.670
Last: 1.580
SL1: 1.520

$SUIWAH / 9865 (SUIWAH CORPORATION BERHAD) $DAIBOCI / 8125 (DAIBOCHI BERHAD) $KIANJOO / 3522 (KIAN JOO CAN FACTORY BERHAD) $MAA / 1198 (MAA GROUP BERHAD) $YEELEE / 5584 (YEE LEE CORPORATION BHD)

$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".

KUALA LUMPUR: Can-One Bhd plans to use proceeds from the sale of F&B Nutrition Sdn Bhd to pare down its debts especially bank borrowings taken to privatize Kian Joo Can Factory Bhd (KJCFB).
It said on Monday the proposed disposal would allow the group to achieve two main corporate objectives, namely:

@wsk20 unsure yet what they will do. They can choose to pay down all the debts or pay partial as special dividend, but I think lowering debt is a must. I read somewhere that acquiring $KIANJOO / 3522 (KIAN JOO CAN FACTORY BERHAD) & benefits to bottom line earnings gained from that is less than the costs of interests added in the short term. So yah, dont expect too much dividend haha

$CANONE / 5105 (CAN-ONE BERHAD) should go to their AGM & find out more!

$CANONE / 5105 (CAN-ONE BERHAD) - So question is... will they sell the unit?

Post $KIANJOO / 3522 (KIAN JOO CAN FACTORY BERHAD), CANONE now have about 2b debt. Interest payments there will be painful. Selling this unit will reduce that burden by HALF.

If I'm in the board room right now, question that needs to be asked is, 1) can they get better price for the unit? 2) Are there any other willing buyer? 3) Is the profits gained from the unit as good as interest savings that will be earned from reducing debt by half?

The buying party is quite aggressive, they're getting the unit similar to 2016 prices and they know they're in better negotiation stance because of Canone's current situation.

KUALA LUMPUR: Can-One Bhd’s first quarter ended March 31, 2019 (1QFY19) net profit soared to RM96.88 million from RM11.43 million a year ago, thanks to a hefty gain of RM252.33 million from its purchase of shares in Kian Joo Can Factory Bhd (KJCF) as part of its takeover of the aluminium can maker.

KUALA LUMPUR: Can-One Bhd rose in early trade today following Tuesday's announcement that its RM3.10 offer for shares in Kian Joo Can Factory Bhd had ended and that it now held a 97.48% stake in the company.

Can-One Bhd announced that its RM3.10 offer for the shares of Kian Joo Can Factory Bhd (KJCF) has closed today, with the offeror holding a total of 432.96 million or 97.48% of the company’s shares.
As Can-One does not intend to maintain the listing of KJCF, the trading of the latter’s shares will be suspended effective May 9, Can-One's stock exchange filing showed

Can-One Bhd announced that its RM3.10 offer for the shares of Kian Joo Can Factory Bhd (KJCF) has closed today, with the offeror holding a total of 432.96 million or 97.48% of the company’s shares.
As Can-One does not intend to maintain the listing of KJCF, the trading of the latter’s shares will be suspended effective May 9, Can-One's stock exchange filing showed