08-06-2021, 03:36 PM
(06-06-2021, 02:09 PM)LionFlyer Wrote:(06-06-2021, 10:33 AM)fallscushion Wrote: It's over 10years already and I don't think Mr Wong is going to change his stand soon (if ever).
<vested, near core>
Holding excessive cash is not really effective capital management and conventional wisdom says you should either return it to the shareholders or spend on acquisition. After holding Boustead for around 10 years, I'm resigned to the fact that this would depend on the next generation of leaders after FF Wong. If he wanted to return the money or spend it, there were opportunities to do so during that period.
Mr Wong has made it no secret that he is willing to wait and be patient to make the right acquisitions and investments. It has been communicated in his messages over the years as well. He is similar in mentality and philosophy to Warren Buffett, so that is the way that he views business, M&A and investments, with an extremely long view.
Based on Mr Wong and the senior leadership team’s track record, when value is unlocked, our shareholders have been significantly rewarded as well. Examples include:
• The distribution of EasyCall International Ltd by dividend-in-specie in 2006. EasyCall was turned around by Boustead through the establishment of Tianjin University of Commerce Boustead College as a full-fledged university in 2002, pivoting away from EasyCall’s sunset paging business. In 2006, the share price of each EasyCall share at distribution was about 7.8 Singapore cents. In that same year, we thereafter placed out EasyCall shares to Raffles Education and the share price peaked at 80 cents before being privatised by Raffles Education at 50 cents. For shareholders who held on and divested during the peak or even at privatisation, they would have been greatly rewarded.
• The distribution of Boustead Projects Ltd by dividend-in-specie in 2015. The implied share price of each Boustead Projects share based on NAV at distribution was about 58 Singapore cents. We are already seeing the value creation with current NAV of S$1.37 and the establishment of Boustead Industrial Fund, not to mention that RNAV would be at higher levels. Again, shareholders who held on would have been greatly rewarded.
• The growth all of the other major divisions significantly over the time period from 1996 until present day. Mr Wong entered Boustead at about 26 cents per share, paying a premium of more than 2x to enter because he believed in the Boustead brand name acquired and ability to create value using the Boustead brand name. Shareholders who entered Boustead at exactly the same time would have been greatly rewarded with the cash dividends, dividends-in-specie, share buybacks and capital appreciation over that period.
Mr Wong would be the largest beneficiary if higher dividends were paid out. However, he has always kept in mind the sustainability of businesses and value creation. While more dividends could be paid out, it would be unwelcome to shareholders if we need to call for more capital when we come across the right opportunity.
Hope that helps to explain Mr Wong and the senior leadership team’s philosophy.
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