Ossia International Limited

Many investors have voiced out that SGX's $40m minimum market cap threshold for continued listing is a stupid rule, as it does not take into account other more important factors like the quality of the underlying business and its assets, the unique circumstances, etc. Anyway, it appears that for decent companies, SGX has been applying enough common sense, by allowing for extension - even multi-year extensions in some cases - beyond the stated requirement of 3 years. I really don't see this as a major issue, as Ossia has said that the BOD "will continue to consider various options to meet the requirements"..
https://links.sgx.com/FileOpen/OIL%20-%2...eID=668231

Mr Market may well just take care of this issue on his own. Just imagine if and when Ossia announces selling the 19.8% effective interest in Pertama for say $40m and paying out a $0.15/share special dividend from the proceeds.

I have zero idea about Ossia, but I know Harvey Norman. My most recent encounter is buying a steam iron there, then soon realised that i could get it atleast 10-20% cheaper if I buy it online. I used to be fan of Qoo10 and Taobao, now I am a fan of Shopee and Lazada. To my surprise, a lot of giant electronics retailler stands firm despite the covid measures but many departmental stores closed shop. Sorry to say but i think retail are sunset business in the next 1 or 2 decades.

(02-06-2021, 08:19 AM)valuebuddies Wrote: I have zero idea about Ossia, but I know Harvey Norman. My most recent encounter is buying a steam iron there, then soon realised that i could get it atleast 10-20% cheaper if I buy it online. I used to be fan of Qoo10 and Taobao, now I am a fan of Shopee and Lazada. To my surprise, a lot of giant electronics retailler stands firm despite the covid measures but many departmental stores closed shop. Sorry to say but i think retail are sunset business in the next 1 or 2 decades.

2 relevant questions : Do Shopee or Lazada make a consistent profit from their inception until now? If they do - I doubt so! - do they pay out regular dividends?

Other relevant questions : Is price competition the only way to succeed in business? Without a consistent profit, how would a listed enterprise deliver real value to shareholders, or raise more capital to grow further?

On Harvey Norman, it is better and important to dig into the facts..
http://clients.weblink.com.au/news/pdf/02347346.pdf (1H results)
http://clients.weblink.com.au/news/pdf/02347352.pdf (slides)

@dydx,
I think when forumer valuebuddies bought up his experience and subsequent comparison, his intention isn't to contrast between the companies themselves, as investment opportunities. Rather he is talking about the experience from a customer's standpoint. When your competitor doesn't talk about profit, it is not easy for you especially if you have price sensitive customers, ditto Comfortdelgro vs Uber/Grab. Of course, Harvey Norman, a typical retailer has their own business model/tricks - from knowledgeable sales/support to cross-selling - that is helping them.

I thought d.o.g.'s 4Q 2020 letter has a very apt commentary to explain the dynamics of loss making competitors encroaching into your domain, and have some answers to your "other relevant questions" : https://www.lighthouse-advisors.com/LH_P...020_Q4.pdf

In general, I would run away because we ain't playing the same game.


@valuebuddies
Covid-19 closed down borders and with disposal income/gov grants, one of the secondary effects was people spending their discretionary income on items like electronics/home furnishing etc. Forumer Big Toe has some good commentary on this.

Many of the big dept stores already had the writing on the wall before covid-19 came on shore. So, there isn't any way for them to take advantage of this riding tide that lifts all boats. As in life, sometimes we just need to survive long enough for that big wave (ie. luck) to lift us up and turn our fortunes.

I don't invest in SEA, but look at Alibaba and Amazon, they are in huge success pursuing ecommerce. In Singapore, we all recognise that retail rent is expensive, less locals willing to work as retail, and a lot of red tape if hiring foreigners. So on business standpoint, which one burn money quicker? I can tell you that SEA is not profitable at this stage, their strategy now is to build up the market share which I think they are very successful by far. They can ask for almost unlimited funding round to raise capital as and when they need.

On consumer's perspective, as of now, it is a lot easier, convenient and cheaper to buy online. I once shared with friends that buying from Taobao is not purely becoz of price, it is because of the choices, the variety and you get all informationin 1 page without having to ask.

On investor's perspective, if I really have to choose 1 between the 2, I would rather choose ecommerce.

On my comments that retails is sunset business in Singapore, in additions to those I mentioned above, we all know that Singapore is quite dependent on tourists, I don't know the statistics, but when I travel overseas, I spent on foods, goods and services. It is true that local spendings are increasing due to the shifting of the travel funds, but this would be temporary effect. As much as you want to spend, you can't buy 3 TVs for your living room in 3 years.

I just wish doing business and making consistent profits in listed enterprises are easier, including investors understanding their actual business process and dynamics in order to make rational investment decisions for themselves. I just find a lot of the new disruptive businesses/companies raising huge amounts of new capital in multiple series before IPO in order to grow quickly, are very much just like telling nice trendy stories, including if and when they ever reach the IPO stage. At which point, with help from hungry investment banks, the real suckers from the retail investors domain come in, with many continue to trade the stocks and market for a quick buck.

Retail cannot be all a sunset industry. Take a good look at The Hour Glass, Challenger, Sheng Siong, etc. I remember when RedMart and Lazada first started, their founders and original investors were all too happy to sell the businesses into the fold of Alibaba, which has since poured in billions to build volume, market share, and supporting infrastructure for the business - just like a traditional retailer would have to invest in their stores. The key point to note here : it is entirely not clear that RedMart/Lazada is able to make decent profits after so many years of trying.

One thing is clear in retail though - especially in low price consumer items (e.g. groceries), the cost of last mile delivery to the buyer (home or elsewhere) can be a killer. That's why community shopping at supermarts or malls nearby our homes is still the most cost-effective mode overall. If RedMart/Lazada or Shopee choose the continue subsidising on home delivery, well and good for consumers who support them. But this cannot last indefinitely, as it is loss-making and irrational as a business.

ecommerce is cheaper now because the online platforms are taking negative net margins when purchasing orders. In fact as SEA investor reports show, as Shopee grew its GMV, its losses are widening. This means despite operating leverage, SEA group has been fulfilling orders at negative margins. It is simply to kill off its e-commerce rivals.

However when the dust has settled among the e commerce battle and the ecommerce sites now have to monetize their market share, I am not sure if they can compete with stalls such as courts and harvey norman. Because the latter have both a brick and mortar front and online sites. If the latter can offer variety and show consumers the real product and subsequently let consumers buy at their online site at prices same to the ecommerce, consumers will pick Courts and Harvey Norman.

Of course SEA group can engage on another round of cut throat pricing to fight them, but I wonder how much money can they burn to win the entire South East Asia

FY21 AR just out..
https://links.sgx.com/FileOpen/Ossia%20-...eID=674971

The most valuable asset has to be the effective 19.8% stake in Pertama Holdings Pte Ltd - held under 40%-owned associated company Harvey Norman Ossia (Asia) Pte Ltd - which owns and operates the Harvey Norman retail stores in Singapore and Malaysia.

Unconditional GO at $0.145/share from the Goh brothers...
https://links.sgx.com/FileOpen/Offer%20A...eID=806465

(16-06-2024, 08:06 PM)dydx Wrote: Unconditional GO at $0.145/share from the Goh brothers...
https://links.sgx.com/FileOpen/Offer%20A...eID=806465

Hi dydx,

I am afraid that the offer price is not good enough. Ossia is only valued at around 5.6x PE and 0.66x PB with this offer and the company being in a comfortable net cash position with little debt.

Investors should hold out and wait, since the offeror did not say this is the final offer. Let's see what the IFA has to say.