KSH Holdings

[money]

hi ghchua,

Do we believe that Towkays prefer less lumpy businesses than the lumpy ones they found themselves in? Or maybe it is only OPMIs that don't like volatility?

I think Towkays embrace volatility and are used to it. If they want less volatility through investment properties, there is a choice to declare dividends out of the listed entity and invest the monies on their own property ventures. It is not different from an OPMI doing equity investing, earn some money from it and then use it to buy an investment property on their own. 

Between retaining capital to invest via the listed entity AND paying out capital to invest on your own, i will always favor the latter. So, this is what I mean by "red flag" in my personal checklist. Of course, not all companies that invest in "non core" investment properties are bad. But this "red flag" check has saved me lotsa heartaches I suppose.

Agree with weijian there. Whenever the company's core business isnt property investment, but starts buying investment properties with excess cash on the balance sheet, i always see it as a terrible way to deploy capital. 

And if got fair value gains on the investment properties, they seem to reward themselves more bonus. And when got fair value losses, the share price gets pushed down and OPMI suffer. Heads they win, tails OPMI lose