Sino Grandness

For s-chips, just be extra careful. So many funds get burnt by various s-chips.

(30-10-2014, 01:52 PM)Tiggerbee Wrote: I think the main reason why the company has not been doing share buy backs is due to their cash flow issues. I wonder how they are going to pay out dividends if their free cash flow generation is so poor.

The issue with free cash flow is common with high growth companies (which SG claim they are). This is because excess cash is used to invest in more PPE to support the growth in sales. FCF usually improves after the market mature and their growth slows; that is when a high growth company turns into a cash cow, distributing excess profit as dividends.

That said, this is also where most fraud happens. Covering fictitious earnings with fictitious spending on non-existent PPEs.

I was hoping the placement would throttle SGs growth plans a little to distribute back cash to investors. On one hand, it would improve investors confidence. On the other, it would prevent SG from overextending itself and expose investors to more risk.

(vested, high-risk recognized, caveat emptor)

(30-10-2014, 02:00 PM)portuser Wrote:

(30-10-2014, 01:42 PM)Wildreamz Wrote:

(30-10-2014, 01:22 PM)portuser Wrote: The announcement on placement share price adjustment has sparked intense debate among friends.

One camp is devastated. Apart from a lower sum from the Thai investors, they think this is the pretext for Thai investors to pull out as share price will fall below 40c.

The other is upset with the share price adjustment too.

But they think that share price adjustment is unavoidable as TTA, being listed on Thai Exchange, has to propose this to safeguard the interests of its minority shareholders.

They are also of the opinion that TTA Board must have carefully reviewed the situation, arising from the share price plunge after circulation of the short-seller report, and is satisfied with Sino’s financials. If the board has doubt, it would have asked Sino to find a way to terminate the deal. The alternative to Sino’s not complying is exposure of its frauds.

Ironically, the announcement on share price adjustment serves to confirm their long-held belief that Sino is no fraud.

Hope I understand you correctly; you mean it indirectly confirmed that the Thais do not think SG is a fraud (since they are still interested)?

The second camp concludes that if TTA Board doubts Sino’s financials, it will not be interested in a stake in Sino, even though at a much lower price of 40c?

And the board can stay away from the public view by getting Sino to withdraw on its own.

If there is any flaw in their assumptions, please share.

If TTA did not doubt the financials they would have stuck to the 61c agreed price since they considered 0.61 ATTRACTIVE in their announcement when they signed the placement deal.

"In addition, the subscription price of SGD 0.610 per share, which is approximately 8% discount to the market price, is considered attractive given that it represents approximately 4.4 times P/E and 1.3 times price per book value (based on 2013 full-year audited consolidated figures)."

The Thai has flipped the terms like a roti prata. Makes me wonder if he will one day also change the 10 year moratorium to a 10 day moratorium?

Would loquat investors welcome such a chairman who flips on the dime and does not honor his commitment?

Not vested. Not short. Shocked.

(30-10-2014, 03:47 PM)chinafarmer Wrote: If TTA did not doubt the financials they would have stuck to the 61c agreed price since they considered 0.61 ATTRACTIVE in their announcement when they signed the placement deal.

"In addition, the subscription price of SGD 0.610 per share, which is approximately 8% discount to the market price, is considered attractive given that it represents approximately 4.4 times P/E and 1.3 times price per book value (based on 2013 full-year audited consolidated figures)."

The Thai has flipped the terms like a roti prata. Makes me wonder if he will one day also change the 10 year moratorium to a 10 day moratorium?

Would loquat investors welcome such a chairman who flips on the dime and does not honor his commitment?

Not vested. Not short. Shocked.

The answer is no. But I imagine if he stuck to his guns, there will also be detractors saying, why didn't TTA tried to get the most out of SG predicament? Well, he is Asian, probably is matter of saving face.. Just look at CMZ's thread during Indofood's takeover.

(30-10-2014, 05:24 PM)Wildreamz Wrote:

(30-10-2014, 03:47 PM)chinafarmer Wrote: If TTA did not doubt the financials they would have stuck to the 61c agreed price since they considered 0.61 ATTRACTIVE in their announcement when they signed the placement deal.

"In addition, the subscription price of SGD 0.610 per share, which is approximately 8% discount to the market price, is considered attractive given that it represents approximately 4.4 times P/E and 1.3 times price per book value (based on 2013 full-year audited consolidated figures)."

The Thai has flipped the terms like a roti prata. Makes me wonder if he will one day also change the 10 year moratorium to a 10 day moratorium?

Would loquat investors welcome such a chairman who flips on the dime and does not honor his commitment?

Not vested. Not short. Shocked.

The answer is no. But I imagine if he stuck to his guns, there will also be detractors saying, why didn't TTA tried to get the most out of SG predicament? Well, he is Asian, probably is matter of saving face.. Just look at CMZ's thread during Indofood's takeover.

When a piece of real estate is revalued lower, for whatever reason, and you have yet to commit to the purchase, would you pay the previous higher valued price or the latest lower valued price? TTA would of course tried to negotiate a better deal since Sino share price plunged. Pure business, they are still interested in the piece of real estate..uh, Sino, I meant. They just can't pay over market value even if they are interested, committed, they also have their own shareholders to answer to.

(30-10-2014, 07:14 PM)Bluechipfan Wrote:

(30-10-2014, 05:24 PM)Wildreamz Wrote:

(30-10-2014, 03:47 PM)chinafarmer Wrote: If TTA did not doubt the financials they would have stuck to the 61c agreed price since they considered 0.61 ATTRACTIVE in their announcement when they signed the placement deal.

"In addition, the subscription price of SGD 0.610 per share, which is approximately 8% discount to the market price, is considered attractive given that it represents approximately 4.4 times P/E and 1.3 times price per book value (based on 2013 full-year audited consolidated figures)."

The Thai has flipped the terms like a roti prata. Makes me wonder if he will one day also change the 10 year moratorium to a 10 day moratorium?

Would loquat investors welcome such a chairman who flips on the dime and does not honor his commitment?

Not vested. Not short. Shocked.

The answer is no. But I imagine if he stuck to his guns, there will also be detractors saying, why didn't TTA tried to get the most out of SG predicament? Well, he is Asian, probably is matter of saving face.. Just look at CMZ's thread during Indofood's takeover.

When a piece of real estate is revalued lower, for whatever reason, and you have yet to commit to the purchase, would you pay the previous higher valued price or the latest lower valued price? TTA would of course tried to negotiate a better deal since Sino share price plunged. Pure business, they are still interested in the piece of real estate..uh, Sino, I meant. They just can't pay over market value even if they are interested, committed, they also have their own shareholders to answer to.

Your analogy does not make sense.

Firstly, subscription agreement was a commitment with conditions layed out. The 61cents was not a valuation but a mutually commited price. The conditions of the original agreement contained no terms that allowed for adjustment of the price due to market volatility. Anyway market volatility has always been prevalent in the stock market ever since it was created.

Your analogy is as good as saying I bought Blumont a week before the crash but since I have not paid for the Buy Contract as the contra period is not due yet, I should be given the right to adjust down my price to the post crash price as I need to account to my family too.

Price integrity mechanics must be honored in the stock market. Will SGX allow such a deal to be approved? Will they approve the listing of shares done on a price that questions the price integrity of markets? Will this set a precedence for future questionable deals? Can the public also not honor their trades done on the market?

I hope the regulators will do something seriously. This is undermining the basic mechanics of the stock market.

Not vested. Not short. Shocked.

(31-10-2014, 01:50 AM)chinafarmer Wrote: Your analogy does not make sense.

Firstly, subscription agreement was a commitment with conditions layed out. The 61cents was not a valuation but a mutually commited price. The conditions of the original agreement contained no terms that allowed for adjustment of the price due to market volatility. Anyway market volatility has always been prevalent in the stock market ever since it was created.

Your analogy is as good as saying I bought Blumont a week before the crash but since I have not paid for the Buy Contract as the contra period is not due yet, I should be given the right to adjust down my price to the post crash price as I need to account to my family too.

Price integrity mechanics must be honored in the stock market. Will SGX allow such a deal to be approved? Will they approve the listing of shares done on a price that questions the price integrity of markets? Will this set a precedence for future questionable deals? Can the public also not honor their trades done on the market?

I hope the regulators will do something seriously. This is undermining the basic mechanics of the stock market.

Not vested. Not short. Shocked.

While I agree it is not an honourable thing to do. This is the real world, there is no honour to be found in cold hard business transaction. Even Warren Buffett took advantage of market volatility and buy cheap business at cut-throat price at times.

But that said. I am not sure if there is absolutely no term that allowed for change in placement price, for one thing, has anyone went to inspect the Subscription Agreement at 6 Battery Road?

Went down yesterday. As the respective team of lawyers were not around, I did not manage to review the agreement specifically clause 4.1. Still waiting for their reply.

(31-10-2014, 09:16 AM)Wildreamz Wrote:

(31-10-2014, 01:50 AM)chinafarmer Wrote: Your analogy does not make sense.

Firstly, subscription agreement was a commitment with conditions layed out. The 61cents was not a valuation but a mutually commited price. The conditions of the original agreement contained no terms that allowed for adjustment of the price due to market volatility. Anyway market volatility has always been prevalent in the stock market ever since it was created.

Your analogy is as good as saying I bought Blumont a week before the crash but since I have not paid for the Buy Contract as the contra period is not due yet, I should be given the right to adjust down my price to the post crash price as I need to account to my family too.

Price integrity mechanics must be honored in the stock market. Will SGX allow such a deal to be approved? Will they approve the listing of shares done on a price that questions the price integrity of markets? Will this set a precedence for future questionable deals? Can the public also not honor their trades done on the market?

I hope the regulators will do something seriously. This is undermining the basic mechanics of the stock market.

Not vested. Not short. Shocked.

While I agree it is not an honourable thing to do. This is the real world, there is no honour to be found in cold hard business transaction. Even Warren Buffett took advantage of market volatility and buy cheap business at cut-throat price at times.

But that said. I am not sure if there is absolutely no term that allowed for change in placement price, for one thing, has anyone went to inspect the Subscription Agreement at 6 Battery Road?

It is a major deal, which involved tenth of million in value. I didn't inspect the agreement, but it is a reasonable assumption that relevant escape clauses exists for the Thai Towkay to adjust upon market volatility.

(not vested, and have no interest on this stock)

(31-10-2014, 09:34 AM)CityFarmer Wrote: It is a major deal, which involved tenth of million in value. I didn't inspect the agreement, but it is a reasonable assumption that relevant escape clauses exists for the Thai Towkay to adjust upon market volatility.

(not vested, and have no interest on this stock)

I went to Thai website and read the announcement. Under Conditions Precedent it is written:


6. Conditions Precedent
The placement is conditional upon the approval in principle of SGX-ST for the listing and
quotation of the Placement Shares on the Official List of the SGX-ST as well as approval
from relevant authorities in Thailand in relation to exchange of control and payments to
be made out of Thailand.

I doubt there was an escape clause in the original agreement. However, investors must go to the Battery Road address and check to establish the facts.

Not vested. Not short. More shocked.