Sheng Siong Group

[CityFarmer]

It is not illogical. It makes perfect sense because cash is hand in worth two in others' bush

Using the same example, say both management changed on the 10th year. Company A continue to pay out while B retains. Then suddenly you realise IPT coming for both companies. Salary soaring. Cash unaccounted for. Which company has more risk... remembering that A actually has much less cash than B to play punk.

When we value both company A and B, it is illogical to value B less than A, because asset in A is less than B, while business qualities remain the same for both. The worst case, "extra" retained earning in B, worth nothing, and both A and B will have similar valuation. In practice, the "extra" retained earning should not be discounted to zero, but in between zero and full value.

I do understand the emotional factor for dividend payout, but value investing advocates elimination of emotional factor in valuation, right?

What do you think the above argument?