Sunningdale Tech replies to Quarz, says focus on 'long-term value'

Published Wed, Mar 6, 2019 · 11:05 AM

A DAY after being urged by a minority shareholder to improve its quality of financial reporting, the board of Sunningdale Tech said on Wednesday that it will give the recommendations "appropriate consideration".

On Tuesday, Quarz Capital Management urged Sunningdale in an open letter to increase shareholder value by reporting one-off costs separately from core net profit in its income statement, in order to give investors a better sense of the company's underlying fundamentals.

The one-off costs refer to production ramp-up costs at Sunningdale's new Penang plant, as well as duplication in operating costs due to a delay in shifting operations from Shanghai to Chuzhou.

The Mainboard-listed high-precision plastic components maker replied on Wednesday: "The board will continue to explore all options that may unlock value for shareholders as the group executes various growth strategies aimed at enhancing long-term shareholder value. While the board does not ignore the share price movement, we believe that our unwavering focus on the fundamentals of our businesses will bring more enduring long-term value accretion to our shareholders."

It added: "The board agrees that the transition in shifting manufacturing operations from Shanghai to Chuzhou and the initial start-up phase in Penang have caused a drag on the group's near-term financial performance. However, as disclosed in the group's FY2018 financial results announcements, the group expects completion of the shift in operations from Shanghai to Chuzhou to take place by 3Q2019 and for utilisation levels in Penang to improve in 2H2019.

"In addition to the above two factors ... the group also faced cost pressures in the form of rising labour and utility costs, price pressure from customers and negative sentiment surrounding the US-China trade war. The group was further impacted by a slowing automotive market as global automotive sales declined in key markets such as the US, China and Europe towards the end of 2018."

Quarz owns less than 5 per cent of Sunningdale. Sunningdale shares rose six Singapore cents or 4.41 per cent to S$1.42 on Wednesday.


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