Eastern Holdings

How come the IFA can advise the ID to reject the offer? IN Wing Tai 's case, this was not so despite the offer being made at a substantial discount to the book value.

Now that the offer has ended and minority shareholders did not manage to block the share buyback mandate at the EGM, it might be informative to 'consult' Graham and Dodd's views on the following kind of situation:

<<Following extracted from Security Analysis by Graham and Dodd, Chapter 44>>

Abuse of Shareholders through Open-market Purchase of Shares
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Westmoreand Coal Company: Another Example. A more recent illustration of the dubious advantage accruing to stockholders from a policy of open-market repurchases of common stock is supplied by the case of Westmoreland Coal. In the ten years 1929–1938 this company reported a net loss in the aggregate amounting to $309,000, or $1.70 per share. However, these losses resulted after deduction of depreciation and depletion allowances totaling $2,658,000, which was largely in excess of new capital expenditures. Thus the company’s cash position actually improved considerably during this period, despite payment of very irregular dividends aggregating $4.10 per share. In 1935, according to its annual reports, the company began to repurchase its own stock in the open market. By the end of 1938 it had thus acquired 44,634 shares, which were more than 22% of the entire issue. The average price paid for this stock was $8.67 per share. Note here the
extraordinary fact that this average price paid was less than one-half the cash-asset holdings alone per share, without counting the very large other tangible assets. Note also that at no time between 1930 and 1939 did the stock sell so high as its cash assets alone. (At the end of 1938 the company reported cash and marketable securities totaling $2,772,000, while the entire stock issue was selling for $1,400,000.) If this situation is analyzed, the following facts appear clear:
1. The low market price of the stock was due to the absence of earnings and the irregular dividend. Under such conditions the quoted price would not reflect the very large cash holding theoretically available for the shares. Stocks sell on earnings and dividends and not on cash-asset values—unless distribution of these cash assets is in prospect.
2. The true obligation of managements is to recognize the realities of such a situation and to do all in their power to protect every stockholder against unwarranted depreciation of his investment, and particularly against unnecessary sacrifice of a large part of the true value of his shares. Such sacrifices are likely to be widespread under conditions of this kind, because many stockholders will be moved by necessity or the desire for steady income or by a discouraged view of the coal industry to sell their shares for what they can get.
3. The anomaly presented by exceptionally large cash holdings and an absurdly low market price was obviously preventable. That the company had more cash than it needed is confessed by the fact that it had money available to buy in cheap stock—even if it were not evident from a study of the unusual relationship between cash holdings and annual business done.
4. All cash that could possibly be spared should have been returned to the stockholders on a pro rata basis. The use of some of it to buy in shares as cheaply as possible is unjust to the many stockholders induced by need or ignorance to sell. It favors those strong enough to hold their shares indefinitely. It particularly advantages those in control of the company, for in their case the company’s cash applicable to their stock is readily available to them if they should need it (since they could then bring about a distribution). Just because this situation is distinctly not true of the rank and file of the stockholders, the market discounts so cruelly the value of their cash when held by the company instead of themselves.

No payout to shareholders but reinvested somewhere else.

not vested.

http://www.businesstimes.com.sg/breaking...d-20121004


Eastern Holdings Ltd on Thursday said it was investing $10 million of its internally generated funds in the the Fullerton SGD Income Fund (FSIF).
"The company currently has dormant funds in its corporate accounts and desires to obtain a more favourable return on the dormant funds," it said.
The FSIF's investment objective is to generate long-term capital appreciation and/or income for investors in Singapore dollars by investing primarily in fixed income or debt securities.
The fund size as at Sept 30, 2012 was $794.65 million.

1H (ended 30Sep12) result makes interesting reading.....
http://info.sgx.com/webcoranncatth.nsf/V...600316413/$file/EHL-Ann-1HFY2013Results.pdf?openelement
A $1.94m realised gain from sale of investment properties boosted PBT and NP; the related proceeds of some $11.0m boosted gross cash and have put Eastern Holdings in a clear net cash position in excess of $19.0m - equivalent to approx. $0.064/share - as at 30Sep12.

It is relevant to note that Easterm Holdings continues to pare its large investment properties portfolio - many items of which are carried at ultra-conservative historical costs in the B/S - which should lead to a further increase in net cash. I thought this is a rational move by the management. Does it mean that some 'jumbo' dividends will be paid in the foreseeable future?

De ja vu
Hope this grove drive launch goes better than before...

http://www.epl.com.sg/property/grovedrive_house.html

Also hopefully 2013 is the year for the rest of the major properties:

http://www.commercialguru.com.sg/find-co...de=&submit=

http://www.commercialguru.com.sg/find-co...de=&submit=

http://www.commercialguru.com.sg/find-co...de=&submit=

CEO bought 110 lots at 18 cents last friday, his first since the close of the last offer (17 Aug)

4 adjoining freehold shophouses (total 9,600 sq ft) at North Bridge Road auctioned for 15 mil, monthly rental 28.5k giving a gross rental yield of 2.28%:

http://www.businesstimes.com.sg/specials...s-20130125

Similar to the 4 adjoining Tras Street shophouses (total 16,100 sq ft) owned by Eastern Holdings but which are 99 years leasehold (from 1994).

CEO bought 60 lots at 18 cents on wed. Looks like price might be restricted due to the last GO.

Asking price for Bryton House has recently been raised from 30 to 33 mil

(29-11-2012, 05:41 PM)dydx Wrote: 1H (ended 30Sep12) result makes interesting reading.....
http://info.sgx.com/webcoranncatth.nsf/V...600316413/$file/EHL-Ann-1HFY2013Results.pdf?openelement
A $1.94m realised gain from sale of investment properties boosted PBT and NP; the related proceeds of some $11.0m boosted gross cash and have put Eastern Holdings in a clear net cash position in excess of $19.0m - equivalent to approx. $0.064/share - as at 30Sep12.

It is relevant to note that Easterm Holdings continues to pare its large investment properties portfolio - many items of which are carried at ultra-conservative historical costs in the B/S - which should lead to a further increase in net cash. I thought this is a rational move by the management. Does it mean that some 'jumbo' dividends will be paid in the foreseeable future?

Just did some estimations based on asking price for the major investment and development properties:

Completed properties

EPL Building : 28 mil
Tras Street (4x shophouses) : 28 mil
Bryton House (70% interest of 33 mil) : 23.1 mil

Gross Cash if sold : 79.1 mil

Properties under construction

Grove Residences (6x semi detached) : 39.7 mil
Minus construction cost (estimated @ 400 psf of 24.4k built up area) : 10 mil

Gross Cash if sold and completed : 39.7 - 10 = 29.7

Total Gross Cash : 108.8 mil
Minus a buffer (15%) : 92.5 mil

Plus the existing net cash mentioned by dydx : 92.5 + 19 = 111.5 mil
vs Market Cap @ 18 cents : 54 mil