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The $22m payout itself, at 8.19 times profit, and 3.65 times book value, seems reasonable.
If the recurrent profit from distributing tyres in Beijing, Shanghai and Guangzhou is not insignificant, actual compensation by Sumitomo Rubber Industries is much higher.
I think during the EGM, management should elaborate on whether Stamford Tyres will gain more by giving up distributing Dunlop tyres in China and channelling its resources to South Africa and India.
South Africa and India have much fewer cars than China. Will this disadvantage be taken care of by the full profits from these two countries against the 20% share of profit from China? To what extent will the replacement of RMB profit by a profit denominated by the weaker South African Rand affect Stamford Tyres' bottomline?
If the recurrent profit from distributing tyres in Beijing, Shanghai and Guangzhou is not insignificant, actual compensation by Sumitomo Rubber Industries is much higher.
I think during the EGM, management should elaborate on whether Stamford Tyres will gain more by giving up distributing Dunlop tyres in China and channelling its resources to South Africa and India.
South Africa and India have much fewer cars than China. Will this disadvantage be taken care of by the full profits from these two countries against the 20% share of profit from China? To what extent will the replacement of RMB profit by a profit denominated by the weaker South African Rand affect Stamford Tyres' bottomline?