2015年2月12日星期四

WELLCAL – Interview by Danny Tan


On 29th Nov 2014 (Equitiestracker Annual Value Investors Day), my friend, Danny Tan, managed to interview Mr. Chew personally, who is Executive Director of WELLCAL. With Danny’s permission, I hereby share the interview here.
As you can see as following, the questions in this interview are high quality. I am very impressed with preparation of Danny Tan. Big thank to Danny, and well done!
btw, Danny knew me through this blog, then we became friend. We met up few times in Penang and KL.
Danny – Danny Tan; Chew – Executive Director of WELLCAL
Danny: Can you rate me your company economy of moat from the scale of 1-10 @ strongest?Chew: I won’t rate our company, it’s for investor to rate. However, I would say that my company fulfill all the 7 criteria of company that must have by Warren Buffet
Danny: how does the company raise it’s CAPEX esp rm38mil for its 3rd Factory which is projected to operate July 2015? Would the company raise it through right issue?Chew: Capex usually were obtained via bank loan. At Wellcall, we try not to raise money via rights issue. It defeat our dividend policy which we currently practice.  Our 3rd Factory capacities were expected to be fully utilized based on experience, 11 months upon operations.
Danny: Mr Chew, you mention during your presentation that WellCall is similar to Coca-Cola and Unilever, that’s a huge statement indeed. Can you share with me why you say so.Chew: Yes, there was a slide that I mention on this. It’s not me but the fund managers that have quoted this. Wellcall seems to have the features that grant a similarities to coca-cola or FMCG company. Our rubber hose biz cater to wide industries eg Oil & Gas, Water, industrial. These hose are also replaceable or have it’s wear & tear. Thus creating  repeat sales & demand.
Danny: how sustainable is the 50% dividend policy currently practice by company? Any Share buyback by company?Chew: At Wellcall, we try to maintain our dividend payout. This is reflected on our company dividend payout record @ shown on slides. The dividend payout uptrend. No, we don’t really like share buyback. It’s unproductive and will only benefit certain people. We want to create value for shareholders. And I personally like long term manager and dislike hedge fund.
Danny: Last question, Mr Chew you mind to share to me why you keep selling your shares with latest selling on 19/11/14, 1300 lot at 1.60. Who does this married deal goes to? What makes you sell your holding if you’re confident with your company?
Chew: oh, basically there is 30/70 factor that make me sell my shares. 30% is personally motivated sales, I invest personally in property too. Thus I do sell some shares to lower down my exposure or loan. 70% is motivated by fund or big institution interest. When people like Mondrian Fund @ foreign fund and Public Mutual wanted to invest in our company, they sometimes approach the management. I wanted to have this big fund invested in our company and become top 30 shareholders of our company. That will definitely do good to our company reputation. Indeed Mondrian Fund have even collect our stock on open market and they currently have 10% stakes. There were also instances when I have no choice when I promise to allocate 1000 lot of Wellcall Shares to public mutual at rm2 per lot. Next thing is the shares actually went up to rm2.13. We try to have more liquidity back then.
Danny: Thank you for your time Mr.Chew, any take home message for me?Chew: what is the current FD rates? 3.2%. Wellcall currently pays dividend that amounting to 5%. We are very conservative and careful in our business dealings. We managed our cost well and keep it as low as possible. We does not rely on 1-2 customers. We have more than 100 customers and once they place an order with us, the company demand an upfront 50% payment. These customer base keep on growing and each of them basically contribute 4% sales only. This is one of our strategy of not wanting over reliance on 1-2 major customer. Our products have no brand so we co-exist with the competitors.
Danny: Thank you Mr ChewChew: thank you