Hong Fok

Hi all. This is my first post since discovering this forum. Glad to noticed that there are quite a few old forumers from wallstraits here.

I would want some advice on Hong Fok. I have been holding on to this stock for 6 years now. I am convince of its intrinsic value but somehow no one seems interested to pick this up. It has been trading below its NAV for as long as I know and I am wondering if it is something that I missed or it is the market that is generally not interested in this company? Appreciate any advice on this. Thanks in advance.

Vested.

(30-08-2013, 02:50 PM)kagemusha Wrote: Hi all. This is my first post since discovering this forum. Glad to noticed that there are quite a few old forumers from wallstraits here.

I would want some advice on Hong Fok. I have been holding on to this stock for 6 years now. I am convince of its intrinsic value but somehow no one seems interested to pick this up. It has been trading below its NAV for as long as I know and I am wondering if it is something that I missed or it is the market that is generally not interested in this company? Appreciate any advice on this. Thanks in advance.

Vested.

What do you think of the management?

As far as the management is concern, I think they did the right thing in converting the old space into condo. To me it makes more sense as the old place does not seems to attract shopping crowd anyways. I am glad they did that. I do wish they give back more though, so far, I only receive shares once only. Hopefully they are able to unlock more once the condo completes this year.

(30-08-2013, 03:47 PM)kagemusha Wrote: As far as the management is concern, I think they did the right thing in converting the old space into condo. To me it makes more sense as the old place does not seems to attract shopping crowd anyways. I am glad they did that. I do wish they give back more though, so far, I only receive shares once only. Hopefully they are able to unlock more once the condo completes this year.

No vested, but remember grouses about how much they pay themselves relative to the work they do...

Think this post from Next Insight summarizes it all

a) 4 executive directors of Cheong Family plus 3 management staff, (relatives of Cheong family) i.e. total of 7 persons (all related) drew more than $12m a year in remuneration.

b) Even in yrs when co reported huge losses they continue to pay themselves high remuneration. In the latest accounts if revaluation surplus are excluded, there would be a loss.

c) refuse to declare dividend. Extract from SGX website showed that last div payment was FY31.12.2004, i.e. for past 7yrs from 2005 to 2011, there was zero dividend. In 2007 there was a 6c div but it was offset by rights issue of the same amount, the purpose of which was to utilise s.44 tax credit then.

d) Directors breach of fiduciary duties in reducing profits by increasing own remuneration.

e) No Remuneration Committee or Audit Committee to approve remuneration or accounts.

f) No clearly defined roles of 4 executive directors.

http://www.nextinsight.net/index.php/com...gm-trouble

thks so much for the insight. This is good learning for me.
Do I then summarise that even if a stock may present good value (at least on paper), it may not be beneficial to the common investor, especially when little dividend exist?
Does it mean that having dividend payout will rank higher in the table compare to unlock value?

(30-08-2013, 03:47 PM)kagemusha Wrote: As far as the management is concern, I think they did the right thing in converting the old space into condo. To me it makes more sense as the old place does not seems to attract shopping crowd anyways. I am glad they did that. I do wish they give back more though, so far, I only receive shares once only. Hopefully they are able to unlock more once the condo completes this year.

What the use of creating value but don't share fruits with ALL shareholders? I can name a few cockup companies who tried to privatized before the fruits are obvious to minorities.

In 2015, corporate governance will have more teeth. E.g. CEO and Chairman must be separated. probably need a Renumeration and Audit comm in place. (Cannot remember where I read this).

a well known fact: each one of HongFok's top four overpaid DIRs, is paid more than the entire Board-of-Directors in some other SGX-listed companies !!

Here's HongFok's top four overpaid DIRs in 2012
Name ......................Remuneration Band
Mr Cheong Sim Eng : $2,750,000 to $2,999,999
Mr Cheong Kim Pong : $2,750,000 to $2,999,999
Mr Cheong Pin Chuan : $2,000,000 to $2,249,999
Ms Cheong Hooi Kheng : $1,750,000 to $1,999,999

below what's the entire Board-of-Directors for some other SGX companies get in 2012.

FEOrchard:... total compensation to directors - $1,708,000 (2011: $482,000) =} FEOrchard's total been < $0.5m mark for many yrs, big jump in FY2012 due to appointment of LucasChow
HiapHoe : Directors’ remuneration and fees totalled $1,430,774 (2011: $1,177,338) and $136,000 (2011: $158,000) respectively.
Heeton: Directors of the Company $1,214,000 (2011: $ 1,640,000)

and though little, all above three other companies have also been paying out more dividends p.a. than HongFok ever does !,
though no doubt shrhldrs of these three companies, still felt the divs payouts, are still far too little, and the companies can afford to pay out much more.

Despite the above, the share price has been slowly on the uptrend since last year. hmmm.... looks like shareholders are getting some capital gains though?

well maybe, but the valuation is still well below what it could be, I believe.
This is a good point that I will bear in mind.
I mean how long to hold before fair value is realised?
There are opportunity cost involved as well, doesn't it?