ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

(30-05-2011, 03:55 PM)valuestalker Wrote: [ -> ]I just downloaded in my iphone as well.

How you do that?

to use the cash hoard buy back more share from open market is not exactly that wise. the return on share buyback could be much lower than investment in a business. company share buyback at 0.92 - 0.93 level is more of supporting the share price rather than to see the value of share buyback. my guess only.

(30-05-2011, 10:10 PM)EnSabahNur Wrote: [ -> ]

(30-05-2011, 03:55 PM)valuestalker Wrote: [ -> ]I just downloaded in my iphone as well.

How you do that?

Install download application in your iphone (eg: download pro), jst add the link to it. It will dw the mp3

(30-05-2011, 10:41 PM)freedom Wrote: [ -> ]to use the cash hoard buy back more share from open market is not exactly that wise. the return on share buyback could be much lower than investment in a business. company share buyback at 0.92 - 0.93 level is more of supporting the share price rather than to see the value of share buyback. my guess only.

Excess cash can be spent either investing in new businesses or buying back the stock when it is cheap. We don't see a whole lot of it in Singapore, because very few companies like Boustead consistently throw off excess cash, and also I think because many companies that do are part-owned by Temasek, which from the last few years of behaviour isn't currently in the mode of increasing its holdings in its Singapore companies. FF Wong didn't get to be as well-regarded as he is now by wasting shareholders' funds to 'support' the share price.

Here's a case study in excellence: Warren Buffett thinks that Henry Singleton of Teledyne has the best operating and capital deployment record in American business. This is what he does when the stock is cheap.

Singleton recognized how extraordinarily cheap Teledyne's stock was and
acted aggressively to take advantage of this for the benefit of long-term shareholders. Using the company's strong cash flows, he embarked on one of the most intensive and value-creating share repurchase programs in corporate history. From 1972 to 1984, in a total of eight separate tender offers, Teledyne repurchased nearly 90% of its stock, always
offering shareholders a premium of between 22% and 47% above the prevailing market price, yet still paying prices that proved to be extremely low.
http://www.valueinvestorinsight.com/January07.PDF

In Nov 2010, SGX listed LMA International tendered an offer to repurchase 10% of the outstanding shares at 28% premium to the last traded price. Hence it has happened before though perhaps most companies would prefer distributing excess cash in the form of special dividends. I doubt we will see it occurring too often either.

(Not Vested in Boustead or LMA)

I agree with Redcorolla, FF Wong will not just buy shares in Boustead for the sake of "supporting the share price". It is more of the perception that Boustead is under-valued at a certain price which has prompted those actions. Remember that Boustead has a Cash Management Initiative in place which ensures idle funds can earn a decent return without taking on excessive risk. Also, the net cash amounts are there for their growing portfolio of Design, Build and Lease Projects which require more upfront capital commitments.

With regards to valuation, I agree Salcon should have a zero value as the earnings are not impressive; and I've always wondered if Management would do better for the Group by selling off their Water and Wastewater Division. Real-Estate Solutions Division revenue is indeed "lumpy", which is why Boustead is gunning for more DB&L projects to ensure a more stable and sustainable recurring revenue and cash flows. Even though they had sold off their IBM Technology Park DB&L project, they still managed to re-fill their portfolio in 4Q FY 2011.

I will be listening to the audiocast in detail for more insights.

Thanks guys for all the comments!

With all due respect, company share buyback never is a good idea to return the money to shareholder, imo. most of the time, it only benefit the insiders especially, huge share buyback.

As a growing company, I would prefer Boustead investing its cash hoard rather wasting on share buyback. I am okay it bought some at 0.9+ to show confidence and kinda support share price. What is the return from company share buyback? just a bit above 10%?

I agree the cash can be put to better use investing in businesses, rather than share buy-backs. But the problem is how does Boustead plan to grow its earnings effectively? We shall see how FY 2012 goes....

No offense meant, apologies if there was any.

hi,

i was reading the FY 2011 results, 1 thing that surprised my is the inventory cost under balance sheet. it stands at 3.2mil. it's quite small for a 500mil revenue company. i would imagine that the inventory will be much higher.

maybe it's the way business model is structured and run.
anyone has insights as to why the inventory values is so low?

it is the business model Boustead employs that makes its inventory low.