Straits Trading Company

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You do not need to be a good business operator to have success. For conglomerates, there is also the more important skill of asset allocation. Rather than say "recent success was not entirely of its own making", it should be astute asset allocation at work, IMHO.

Book value is just an accounting metric (eg. STC uses fair value accounting on its investment properties and so it is not entirely conservative here) and I do not see a big issue with new shares issued at "40% discount to NAV". Actions reflect what the managers themselves think in terms of the true value of the company vs the opportunity costs. So it is what it is.

Straits Trading shares reasonably priced, but management must continue delivering value

One criticism of Straits Trading is that much of its recent success was not entirely of its own making.

Its most significant move over the past decade was arguably the establishment of a “strategic alliance” in 2013 with Ara Asset Management and its founder John Lim.

This involved buying a 20.1 per cent stake in Ara Asset Management for S$294.4 million, and forming an 89.5 per cent-owned co-investment vehicle known as Straits Real Estate (SRE) with Lim.

Whatever the benefits of the placement to Straits Trading’s free float, however, some investors may be uncomfortable that the company chose to place out shares at a more than 40 per cent discount to its book value.

https://www.businesstimes.com.sg/opinion...ring-value
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I presume STC charge management fees?

"They can also choose the specific property they want to invest in, unlike real estate investment trusts, which offer a portfolio of selected properties...." - Is this the only difference?

https://www.straitstimes.com/business/co...o-unit-gcb
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(10-09-2023, 02:31 PM)touzi Wrote: I presume STC charge management fees?

"They can also choose the specific property they want to invest in, unlike real estate investment trusts, which offer a portfolio of selected properties...." - Is this the only difference?

https://www.straitstimes.com/business/co...o-unit-gcb

Well, I can't imagine they don't, unless those are "free perks" for ST shareholder club members. Smile

Think Chairwoman Chew and her team sees a gap in the market - GCBs are assets generally ignored by FUM-focused businesses. So they might see it as a way of differentiation to enter the FUM market and eventually/slowly scale up.
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