Sunningdale Tech replies to Quarz, says focus is on 'long-term value'
Singapore
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".
In an open letter on Tuesday, Quarz Capital Management urged Sunningdale 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 board of the mainboard-listed high-precision plastic components maker replied on Wednesday that it is focused on enhancing long-term shareholder value: "Whilst 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."
Sunningdale shares had taken a tumble since it reported disappointing fourth-quarter adjusted earnings of S$1.7 million last Thursday, down 83.8 per cent from the same period a year earlier.
The board 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. The latter's shares rose six Singapore cents or 4.41 per cent to close at S$1.42 on Wednesday.
