SINGAPORE (Dec 13): Precision plastic components manufacturer Sunningdale Tech says it believes focus on the fundamentals of its business will bring greater benefit to shareholders over the long run than raising its dividend distribution.

“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 says in a filing to SGX after market close on Thursday.

Sunningdale’s statement was in response to an open letter published Dec 13 by activist hedge fund Quarz Capital Management, which has an almost 5% stake in the company.

In the letter, Quarz said Sunningdale is “severely undervalued” and urged the board and management of Sunningdale to take decisive actions to boost investor confidence.

Quarz said Sunningdale should distribute more than 60% of its core net profit to provide an “attractive dividend yield” of around 7%.

It added that Sunningdale has been undervalued by shareholders who do not understand its “engineering expertise, products, recurring cash flow, growth catalysts and strong corporate governance”.

See: Quarz urges Sunningdale to raise dividend distribution to 60% of core net profit

In its response, Sunningdale says it will communicate these strengths more widely among the investment community.

“In fact, management has been stepping up investment relation engagement over the years. Over the last three years in particular, we have seen more significant coverage of our Group by major local and overseas brokerage and investment houses, and in the press. We acknowledge this to be a continuous effort,” Sunningdale says.

“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 shareholders value,” it adds.

Shares in Sunningdale Tech closed 6 cents higher, or up 4.3%, at $1.46 on Thursday, with its trading volume surging more than five times the three-month daily average.