Management Q & A
Dear Investors,
Thank you very much for the questions and the opportunities to clarify them.
We hope you have a better understanding of our business through this online exchange.
Your questions will be reposted in blue followed by our replies in black.
Rgds,
The Management Team
Ocean Sky International Limited
Dear John Ng, you wrote:
Considering that the quotas for the exports of Chinese textiles & apparels to US & Europe for the years 2006, 2007 and 2008 have been determined, will you now say that company's yearly exports for these next 3 years will be better than in 2005, view it exports mainly ex Cambodia?
With the recent resolution and conclusion of the US-Sino and Sino-Europe textile agreement, the uncertainties that have plagued the industry will be reduced significantly.
Looking forward and coupled with our fostering of closer partnering agreements with our customers, we are confident that this will lead to a generation of increased business opportunities for our apparel products.
After 2008, will company again face severe competition from China, although it also has a plant in China?
The Group is now able to provide high quality services and products leveraging on our Research & Development capabilities in our Panyu, PRC Plant.
Our PRC production hub focuses on the infants and children markets. We believe that our focus in this business segment there is sufficient for the near future. We will continue to tap on more opportunities as the industry becomes more integrated in future.
We are confident that Ocean Sky is well poised to take this full advantage as we have a larger network endowed with more resources to compete well in the PRC market.
Rgds,
The Management Team
Ocean Sky International Limited
Dear Tie Wang, you wrote:
Dear management, 1st of all, thank you for giving investors opportunity to ask their questions, and congratulations for good Q3 performance. I have been a small share holder of OceanSky since two years ago, when share price hovered around 40c. After that, I saw your share price tumble all the way down to low teens now. Currently, market value of my share has been less than 40% of original investment.
I understood that you have completed a thorough re-alignment in terms of facility location, IT upgrading and more integrated business strategy etc. However, despite your sound Q3 performance, stock price is still stagnant. As such, I like to ask several questions:
1) What's your projection for CAGR of your business in the next 3 years? Do you think OceanSky really go back to growth track, or Q3 is just a luck, one time event?
The strong set of results in Q3 was driven by strong orders from our customers.
Our investments in enhancing our supply chain and integrated manufacturing capabilities have started to bear fruit.
With our PRC and Cambodia facilities coming on stream and fully operational, coupled with our fostering of closer partnering agreements with our customers, I am confident that FY2006 will be a better year as we embark on our next lap of sustainable growth.
2) How you can further improve your profit margin?
The fundamentals of Ocean Sky remain strong.
Being one of the market leaders in the global apparel manufacturing industry, the Company has good growth prospects.
To embark on its next lap of sustainable growth, the Group plans to build on its competitive strengths and leverage on its enhanced position with its Research and Development Facilities in Guangzhou, PRC and its strategically-located global production and sourcing centres.
3) Solid performance is the fundamental for Share price appreciation, however analysts are essential as well to push price higher. Just observed NO SINGLE HOUSE has written a report for OceanSky after Q3 performance. What management will do to improve your PR?
We will continue to maintain an open dialogue with the investing community by organising regular briefings with financial community, meetings with research analysts and fund managers, and keeping our shareholders updated of the company’s developments through appropriate channels of communication such as SGXnet announcements, our company website and the shareinvestor.com portal.
4) How management will show to both FM and retail investor it's worth to invest in OceanSky? Share back back or Director purchase from open market?
We remain committed to enhancing shareholder value by continuing to invest and grow the business.
We are confident that the initiatives laid in the previous years will pay off as we head towards a new business environment.
Just like to stress that Maximizing share holders' value is the ultimate goal of a public listed company. Thank you for your time and have a nice day.
Tie Wang
Rgds,
The Management Team
Ocean Sky International Limited
Dear Ang Yee, Gary, you wrote:
1. Who are your main competitors and what are your relative strengths compared to them?
With the completion of our realignment and the restructuring of our business model, there are not many companies who have the same integrated capabilities that we have.
We are now a fully integrated apparel manufacturer with global end-to-end supply chain management ("SCM") services from design to distribution.
The Group operates three one-stop service centres in the key fashion hubs of Singapore, Hong Kong and the USA.
These centres are supported mainly by its Research and Development ("R&D") Facilities in Guangzhou, People's Republic of China ("PRC"), which provides technical capabilities in fabric & accessories sourcing, innovation in design & product development, and technical & sampling services.
These service centres are also complemented by the Group's three strategic production hubs in Central America, PRC and Cambodia offering integrated apparel manufacturing services including embroidery, screen printing, apparel dyeing and washing to logistics management.
2. What are the main challenges the company faces in the coming years?
We see the main challenges as keeping pace with new rapid fashion trends as well as rapid changes in consumer tastes and preferences.
With the realignment of our business as well as the enhancement of our integrated capabilities, we are confident of meeting these challenges.
3. Any plans to further widen the customer base?
We already have a blue-chip customer base and are constantly securing new customers. We are also constantly tapping on new opportunities and growing the business.
Rgds,
The Management Team
Ocean Sky International Limited
Dear Tan Eng Lam, you wrote:
Notice that there is no dividend declared so far for this year and the share price of Ocean Sky have dropped from over 30 cents previously to 10 or 12 cents recently. Noticed from last year's annual report that the CEO and chairman are getting remunerations in the range of $500k to $750k yearly. This is quite substantial considering that the company's profit is something like $4.3 million in FY2004 only. The CEO and chairman are already getting about one quarter or one third of the company's profit in FY2004, so what value have they provided to shareholders or stakeholders is something which people would like to know also?
In view and in preparation of the end of textile quota imposition by the World Trade Organisation in January this year, the Company took the initiative to restructure its businesses to be better positioned to meet the challenges of a new era in Apparel Manufacturing.
We have made strategic investments in the People's Republic of China and Cambodia. This has led to a set of weaker results. Coupled with the current effects of weaker market sentiment, the share price has been adversely affected.
The restructuring of our businesses has been completed. The Company has also just announced a sterling set of results for the quarter ended September 30, 2005 ("3QFY2005"). Ocean Sky's 3QFY2005 net profit has surged 970% to S$2.6 million.
This strong set of results was driven by strong orders from our customers.
Our investments in enhancing our supply chain and integrated manufacturing capabilities have started to bear fruit.
With our PRC and Cambodia facilities coming on stream and fully operational, coupled with our fostering of closer partnering agreements with our customers, I am confident that FY2006 will be a better year as we embark on our next lap of sustainable growth.
Can the management please make improvements to Ocean Sky's value either in the form of returning more dividends to shareholders, re-visit the remunerations of the CEO and chairman to reduce some expenses or implement some other measures to give to shareholders a fair value of Ocean Sky's share?
We are now a fully integrated apparel manufacturer with global end-to-end supply chain management ("SCM") services from design to distribution.
These moves as given in our previous response have been initiated by no small way by our well-experienced CEO & Executive Chairman who is responsible for charting our corporate strategy and monitoring the Group's performance.
Ocean Sky remains committed to enhance shareholder value and reward our shareholders for supporting us through these challenging few years.
Thank you
Rgds,
The Management Team
Ocean Sky International Limited
Dear Teh Hock Soon, you wrote:
1. Previously, order on hand was reported in your result announcements but not this quarter. I find this piece of information important and hope the management will keep the tradition.
The Management will provide the information as and when it is appropriate.
2. Has the price of cotton/yarn lowered/stabilised since 2004 ? Has air freight expenses been kept to the minimum level since June 2004?
Todate, the cotton/yarn prices has stabilized. Certain air freight expenses are inevitable to meet the demands of our customers. Ocean Sky is committed to being cost effective in meeting our business objectives.
3. With the USD strengthening and better financial result achieved, would the management consider to resume dividend payout? Bearing in mind that the dividend tax credit will expire in two to three years time.
We currently do not have a dividend policy.
However, we believe in rewarding our shareholders.
With increased prospects for our business, depending on how the Group performs at the end of this Financial Year, we will examine the ways to reward our shareholders who have loyally supported us through these few challenging years.
Thank you.
Rgds,
The Management Team
Ocean Sky International Limited
Dear Yee Cheng Siang, you wrote:
1. What is the impact on Ocean Sky after the merger of Federated & May Department Store?
There is no significant impact on Ocean Sky.
2. What are the "Trust receipts/bills purchased" indicated in Cash and cash equivalents section? What does this represents?
These are short terms bank borrowings to finance our trade purchases.
3. Is there any dividend pay-out policy set for the company?
We currently do not have a dividend policy.
However, we believe in rewarding our shareholders.
With increased prospects for our business, depending on how the Group performs at the end of this Financial Year, we will examine the ways to reward our shareholders who have loyally supported us through these few challenging years.
4. With the current price has fell below the Net asset value per share and is seen at current level for quite sometimes, what is the direction that the company intends to take?
In view and in preparation of the end of textile quota imposition by the World Trade Organisation in January this year, the Company took the initiative to restructure its businesses to be better positioned to meet the challenges of a new era in Apparel Manufacturing.
We have made strategic investments in the People's Republic of China and Cambodia. This has led to a set of weaker results. Coupled with the current effects of weaker market sentiment, the share price has been adversely affected.
The restructuring of our businesses has been completed. The Company has also just announced a sterling set of results for the quarter ended September 30, 2005 ("3QFY2005"). Ocean Sky's 3QFY2005 net profit has surged 970% to S$2.6 million.
This strong set of results was driven by strong orders from our customers.
Our investments in enhancing our supply chain and integrated manufacturing capabilities have started to bear fruit.
With our PRC and Cambodia facilities coming on stream and fully operational, coupled with our fostering of closer partnering agreements with our customers, I am confident that FY2006 will be a better year as we embark on our next lap of sustainable growth.
5. Do you believe that the current share price indicates the lack of confidence from shareholders already? Any intended action to boost the investors confidence?
Response as above.
6. There is little or hardly any update on the company development since it is listed on the exchange, what is the direction of the company for the next 1 years, any major customer in the pipeline or major plan that will benefit the investors as a whole?
We have made strategic investments in the People's Republic of China and Cambodia.
Our investments in enhancing our supply chain and integrated manufacturing capabilities have started to bear fruit.
The Group plans to build on its competitive strengths and leverage on its enhanced position with its Research and Development Facilities in Guangzhou, PRC and its strategically-located global production and sourcing centres.
We are now a fully integrated apparel manufacturer with global end-to-end supply chain management ("SCM") services from design to distribution.
We have also just recently secured 02 new customers. They are Russell Corp. and VF Corp.
7. Where does the salary component of the expenses reflected in the company financial report? Is it "Administrative and other operating expenses"?
Production salary is reflected in the cost of sales. Administrative salary is reflected under "administrative and other operating expenses".
8. Does the company believe in Directors' remuneration should be in line with the company performance?
In view and in preparation of the end of textile quota imposition by the World Trade Organisation in January this year, the Company took the initiative to restructure its businesses to be more nimble and competitive.
We have made strategic investments in the People's Republic of China and Cambodia.
These moves have been initiated by no small way by our well-experienced management team and supported by our Board of Directors comprising of 3 Executive Directors, 2 Independent Directors and one Non-Executive Director.
Our Executive Directors collectively have more than 50 years of experience in the apparel industry.
9. How would the company enhances the value of its shareholders with the price breaking record low every few months?
Ocean Sky remains committed to enhance shareholder value and reward our shareholders for supporting us through these challenging few years.
10. Is the company targeting to privatise within the next few years after the price "matches" the share par value?
There are no plans to privatise the Company.
Rgds,
The Management Team
Ocean Sky International Limited
Dear Investors,
Thank you for all your questions and the interest in Ocean Sky International Limited. We have come to the end of this Q&A session.
We have enjoyed and learnt much from your questions and we hope that you have a better insight of our Company and know more about our operations.
Rgds,
The Management Team
Ocean Sky International Limited