Teckwah Industrial Corporation has responded to substantial shareholder Quarz Capital Management’s suggestion that Teckwah can raise its payout ratio and dividends to 80% and 3.15 cents respectively in an open letter dated July 28.

See: Quarz Capital emerges as major shareholder of Teckwah Industrial, suggests raising dividends in open letter

Responding via an open letter on August 4, Teckwah's chairman and managing director Thomas Chua Kee Seng (picture) defended the company's decision to maintain its current dividend payout in line with the group’s long-term interests.

He also mentioned the company's “sound cash management policy” which has enabled it to weather financial crises through the years.

“Our sound balance sheet and net cash position have placed us in a stable position. This is especially important in the current environment, given the unlikelihood of a quick economic recovery,” said Chua.

“More than just the ability to stay afloat, our financial standing has allowed us to build upon our capabilities, invest in new plant and technology, pursue our Digital Transformation & Innovation Programme and maintain customer confidence and trust, even in the midst of this and other previous economic down cycles,” said Chua.

Reiterating the company's stance, Chua thanked shareholders for their support, as well as Quarz “for their comments”.

In an emailed statement on the evening of August 4, Quarz Capital says: “We thank the company for their responses. Unfortunately, the company has not appropriately addressed the points made in our previous letter. We are working on a list of proposals to unlock shareholder value at Teckwah and will be sharing them with the public and fellow shareholders in due course.”

Shares in Teckwah closed 1.5 cents higher, or 2.8% up, at 55.5 cents on August 4.