Hock Lian Seng

[weijian]

Hi weijian,

It’s all good. Everyone is entitled to their own methodology and views, which is what makes a market. I was trying to understand your approach because it sounds like you are thinking that there is some way to go to meet that excess capital for distributing a special dividend to shareholders, whereas I feel that the company is on the cusp of doing it.

But I believe both of us agree that the company is well capitalised and it’s a matter of time.

hi Squirrel,

Indeed, it is diversion of views that makes me excited (and probably you too). I am not really interested in hearing my own echo chamber.

Folks like you and ksir have demonstrated that it is well capitalized, and so I have not dwelled more into something that is obvious. I do not have a call on WHEN it will happen but my studies are focused on HOW, so that I maybe able to have a better understanding on the WHEN.

As astute VBs had pointed out in the past in this thread, it is about following the sales of its Shine@TuasSouth units and also the amount of activity evident on the ground with the new Tuas Mega Port churning (It probably can't be too bad because its remaining units are almost 100% rented out).

Of course, all these studies may not matter too. But that's what makes a market

[¯|_(ツ)_/¯]

hls@33

Great analysis.

May be the next step is to take some action?

Hope you enjoy and had a great journey - just like me 

Gratitude!


For those who don't know AK71, take a look and you might like him (his analysis):
TIPS: for valuebuddies who is impatient, start watching at 2:30 

[weijian]

From what it has revealed publicly, Towkay Chua may be adverse to new residential/industrial property investments. The post-covid Great Construction Boom of 2023/beyond is upon their doorstep and so, are they holding onto their cash for working capital/bidding capacity?

RESPONSES TO QUERIES FROM SECURITIES INVESTORS ASSOCIATION (SINGAPORE) ON THE ANNUAL GENERAL MEETING (“AGM”) TO BE HELD ON 24 APRIL 2024

Would it be reasonable to assume that the group is overcapitalised given the scale of its current operations?

The Board does not hold the view that the Group is overcapitalised or its financial resources are not deployed to maximum returns. One of our key competitive strengths is our strong financial liquidity, it has allowed the Group to achieve lower cost structure and headroom to increase order books.

Both civil engineering and property development businesses are capital intensive in nature. As the Group continue to bid for new infrastructure projects in the public sector, the Group must maintain liquidity (financial resources) to undertake successful bids. The Group has undertaken projects with contract value of above $500 million with execution period more than 5 years.

SIAS Q&A
https://links.sgx.com/FileOpen/Responses...eID=797097

[ksir]

From what it has revealed publicly, Towkay Chua may be adverse to new residential/industrial property investments. The post-covid Great Construction Boom of 2023/beyond is upon their doorstep and so, are they holding onto their cash for working capital/bidding capacity?

RESPONSES TO QUERIES FROM SECURITIES INVESTORS ASSOCIATION (SINGAPORE) ON THE ANNUAL GENERAL MEETING (“AGM”) TO BE HELD ON 24 APRIL 2024

Would it be reasonable to assume that the group is overcapitalised given the scale of its current operations?

The Board does not hold the view that the Group is overcapitalised or its financial resources are not deployed to maximum returns. One of our key competitive strengths is our strong financial liquidity, it has allowed the Group to achieve lower cost structure and headroom to increase order books.

Both civil engineering and property development businesses are capital intensive in nature. As the Group continue to bid for new infrastructure projects in the public sector, the Group must maintain liquidity (financial resources) to undertake successful bids. The Group has undertaken projects with contract value of above $500 million with execution period more than 5 years.

SIAS Q&A
https://links.sgx.com/FileOpen/Responses...eID=797097

Very conservative indeed.
Tons of warchest idling in SG listed companies. 
I reckon partly the reason why this market is unloved haha but also why value investment works here!
Towkays have shown the ways with their low-ball privatizations (why we not taking the cue? haha)

Outside investors looking at STI index and see a very very stagnant index over past 15+ years.
But, the fat fishes are not there in STI index right? 
How many STI index companies get delisted? Close to zero? 

Back to topic, I don't think having tons of net cash is a pre-requisite to successful bidding for Gov projects. 
Otherwise Yongnam wouldn't have won projects with their crazy high debts back then (quite obvious for any Finance folks looking at their book).  

But of course this could be the "shadow" of 1998 liquidity crisis. Similar to what Munger said about Ben Graham still living in shadow of his Great Depression experience.

[weijian]

@ksir,

Besides "tons of warchest", don't forget the "tons of real estate" too We throw stones at Towkay's lowball offers. But surely we love to buy bargains ourselves, don't we? Of course, if we are on the other side of the trade, we have to throw stones.

As for STI components' delisting, with the exceptions of a few (eg. YZJSB and Venture), most of the components are majority owned by either Ah Gong or Godfathers. The last STI component stock to get a (high ball) offer was GLP, iirc. While we can't look forward to any-kind-of-offer for STI components, but I do think there are opportunities wrt to restructurings from Ah Gong/Godfathers. Ditto Keppel Corp.

As for Yongnam, while I have no insight but my guess is that high debt is a result of borrowing cash to fund its project winnings. So it probably had a lot of (borrowed) "cash" to show when it submitted its tenders. But moving on, I am quite sure that LTA and other gov entities will minimize any sort of contractor defaults, which then translates to delays. When you open an MRT line with 10 stations, completing 9 of them ahead of time is meaningless if 1 of them gets delayed.