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

Oh, they removed it. Not even in their archives.

Been reading through the thread, and wondering why nobody seems to be concerned about the fact that management regularly gives out share options to themselves via the ESOS and PSP plans?

Sure, there is nothing unusual about giving out share options to "incentivise management" and "align management with shareholder interests" blah blah blah

But what I do not like about the share options is that they are always at a discount to the average share price, and they vest IMMEDIATELY, and are valid for a long duration.
I tend to be skeptical when I see management treating the company shares as a cheap form of currency, either for remuneration or in any acquisition deals.

Also, one of the directors sold a chunk of shares in 2011 at around $0.2

seems to me that the only factor that attracts investors (myself too) is the relatively high dividend payout

<not vested but considering>

(10-08-2013, 09:20 PM)GFG Wrote: [ -> ]Been reading through the thread, and wondering why nobody seems to be concerned about the fact that management regularly gives out share options to themselves via the ESOS and PSP plans?

Sure, there is nothing unusual about giving out share options to "incentivise management" and "align management with shareholder interests" blah blah blah

But what I do not like about the share options is that they are always at a discount to the average share price, and they vest IMMEDIATELY, and are valid for a long duration.
I tend to be skeptical when I see management treating the company shares as a cheap form of currency, either for remuneration or in any acquisition deals.

Also, one of the directors sold a chunk of shares in 2011 at around $0.2

seems to me that the only factor that attracts investors (myself too) is the relatively high dividend payout

<not vested but considering>

Hi, yes the share option is indeed a concern, in fact " it has many unexercised share options which are lower than $0.205. If all share options are exercised, it will enlarge share base by 5%." I do feel that the ESOP seems to be way underpriced with a 15% discount to market price.

However, if valutronics manages to keep constant NPM and revenue, it will be posting a strong YoY rise in profits in the absence of write offs. This should be able to offset the exercise of options and ensure an substantial increase in EPS.

the share options is one of the negatives, maybe that's a reason why the stock is trading at a big discount to NAV
I do not worry about management exercising the options, it would good if they held more shares and have interest alighted
However I would be very worry if management sells their stake in open market again.

Selling of stakes by management is a very strong signal that they don't think there isn't further upside to be reaped.

Previously, management sold off at 24 cents? Sad to say, that is about how much this company is worth..

(11-08-2013, 08:11 AM)felixleong Wrote: [ -> ]the share options is one of the negatives, maybe that's a reason why the stock is trading at a big discount to NAV
I do not worry about management exercising the options, it would good if they held more shares and have interest alighted
However I would be very worry if management sells their stake in open market again.

Valuing a company's worth based on the price that management sold their shares at is very shallow.

I can find plenty of instances whereby management bought/sold shares and the shares subsequently went down/up.

(11-08-2013, 09:40 PM)sgpunter Wrote: [ -> ]Valuing a company's worth based on the price that management sold their shares at is very shallow.

I can find plenty of instances whereby management bought/sold shares and the shares subsequently went down/up.

I don't think this is just valuing it based on how much management sold it for.
In fact, they sold at a discount to the then market price.
Rather, it is a factor, together with other factors.

The idea of share options is to align management interests with the other SH. If I get share options every year, at a discount, they vest immediately too, and I exercise and sell off the shares, what "alignment with SH interests" is there to talk about?
Then this is simply using company share options as a form of additional remuneration.
To improve it, I would suggest the exercise price be the same as the average traded price, and they vest at least a year after awarding. This would really incentivize management to think long term.

Having said that, I think they only sold once in recent years, and it could indicate that the directors felt that the price went up too fast and too much at that point of time, and that going forward prospects are still sunny.

Overall IMO, it's a fairly good stock to own, but I would keep an eye on the Share options, and definitely include the dilutive effects of the options in my calculations

The company's management has mentioned previously that they think the low share px do not reflect the company's potential. On the other hand, they are being awarded options (with low strike px). The low share px is just a reflection of investors seeing what the insiders do and not what believing they say. It will be more convincing and at the same time sending out a strong signal if the insiders purchase shares from the open market. Unfortunately till now they have not taken this step.

Valuetronics results out. Good results, higher payables make cash holdings look much better. One quarter profits cover their 30 mil HKD needed for dividend.

http://infopub.sgx.com/FileOpen/VHL-Q1FY...eID=251880

During Q1 FY2014, the Group experienced signs of recovery in demand and orders from both
Consumer Electronics and Industrial and Commercial Electronics compared to second half of
FY2013. In Consumer Electronics segment, although revenue dropped in Q1 FY2014
compared to Q1 FY2013, we experienced recovery in demands and orders during this quarter
and revenue increased when compared to the last 2 quarters in FY2013.

We have increased our production capacity to deal with such recovery in orders and are prepared to co-develop a
semi-auto assembly line with one of our customers for its entry to mass market segment.
We continued to benefit from the growth from some of our major customers in the Industrial
and Commercial Electronics segment. The transfers of production facilities from an existing
customer as well as a new customer have further enhanced our product portfolio.

In addition, our medical equipment business has widened our product portfolio with additional new
features during the period. Although initial revenue contribution is low, such enrichment in
product portfolio is an important progress of cooperation with customer recognising our ongoing technical expertise.
We have terminated our Licensing business in August 2012. All relevant costs to fulfil our
obligations after termination of the Licensing business have been accounted for in last
financial year. We did not incur any more expenses related to the Licensing business during
the period and do not expect further expenses for the rest of the financial year ending 31
March 2014 (“FY2014”).

The Group will continue to remain vigilant in monitoring market developments and will
continue with our efforts in improving our fundamentals, including design and development
capabilities, production efficiencies and inventory management.

However, the uncertainties in the global economy and the recurring operational challenges,
including costs and wage pressures in the PRC, are expected to continue. Business
conditions for the Group will remain challenging in FY2014. Notwithstanding these
challenges , the directors expect the Group to remain profitable.

Super HUGE payables and receivables, especially that the revenue stay about the same.

Will need to think a while on it's implication...