Sheng Siong Group

[weijian]

Remuneration is real cashflow.
Total wealth is virtual until you sell your stake.

In this case, each brother will be subjected to 20% income tax and so their take home pay is around $1.36million + whatever declared dividend.
If they decide to give up their pay and receive the remuneration via dividend, it will be 7.0 million x 0.83 x 0.7 / 4 = $1.01 million + whatever additional declared dividend.

So, if you are the owner, is there anyone here willing to cut 26% of your income to make the rest of the shareholders happy?
Or if you are the superior of a few staffs, did you ever give up some of your bonus to reward your hardworking/non hardworking staffs?
As far as I know, most of the times, the superior often gets a higher bonus than their staffs.

I know rich people often pledge their shares as collateral to obtain bridging loans etc. In some sense, the virtual wealth can be REALised.

Precisely my point is that Lim Brothers and their bankers have figured out that they want to take the FIRST BIG bite at the pie NOW, rather than resisting the temptation to have a potentially BIGGER pie to marvel at in FUTURE. Are their actions now a clear indication of their VIEW of the future as well?

[NTL]

I think sheng shiong should follow what challenger has been doing, since both in the retail industry but one is consumer the other is IT products

challenger when its ipo at 10 cents many cows years back it gave all employees shares, the lowest was 10 lots ( free of charge, so min is 1k value)

every since they ipo, they had always paid good dividends to shareholders (since their employees are also share holders), payout has been around half of the earnings or slightly less.

challenger's CEO Mr Loo's salary is about 1 million dollars
but the dividends he receives annually is about 3 million dollars, 3 times his salary

i would be attracted to sheng shiong if they pay themself less and pay out more dividends instead, this would be most fair and the market should react well and support it with a strong stock price too

Challenger making a profit after tax of around $16M for last FY. CEO paying himself $1M. Not that little too.

Furthermore he is returning half the profit to the shareholders while SS returning 90%. Seems like SS take care of the shareholders more. Don't think they are able to pay out much more...

Loo's direct and deemed interest in Challenger is 53%. SS Directors direct and deemed interest is 57%. SS owners do have a bigger stake in company.

Maybe that is why SS warrant a higher PE than Challenger?

[weijian]

When talking about Owners' Renumeration, another company comes to mind. Neo Group.

Looking at their latest AR,

Revenue: $41.7M
Profit before tax: $3.5M
Profit after tax: $3.0M

Neo Kah Kiat : $250,001 - $500,000
Liew Oi Peng (spouse) : $250,001 - $500,000

So in total, the Neo's family ripped a possible of 16-33% of the PAT.

What is Sheng Siong compare with this?

If i am not as handsome as my fellow classmate, it does not make me actually more handsome when i compare myself with the ugliest guy in school right? Of course, PSYCHOLOGICALLY, i feel better..

[NTL]

Of coz. There's always more handsome guys out there.

[camelking]

When talking about Owners' Renumeration, another company comes to mind. Neo Group.

Looking at their latest AR,

Revenue: $41.7M
Profit before tax: $3.5M
Profit after tax: $3.0M

Neo Kah Kiat : $250,001 - $500,000
Liew Oi Peng (spouse) : $250,001 - $500,000

So in total, the Neo's family ripped a possible of 16-33% of the PAT.

What is Sheng Siong compare with this?

This point is only valid if there are only two listed companies (SS and Neo) in SGX.
Even if so, you have the third option of not investing at all.

[NTL]

Ya. There are more handsome guys out there.

[CityFarmer]

Ya. There are more handsome guys out there.

Beauty ("Handsome") is in the eye of the beholder. isn't it?

I am one of them, who "see" beauty in SS, but inaction due to lack of opportunity (in pricing)

[safetyfirst]

Should the growth story fail to realise, then people will start wondering if SS worth the pe of 20. Now when everything seems right, the margin of safety is always forgotten

[NTL]

Ya. There are more handsome guys out there.

Beauty ("Handsome") is in the eye of the beholder. isn't it?

I am one of them, who "see" beauty in SS, but inaction due to lack of opportunity (in pricing)

Definitely. We will have to find our own handsomes and beauties.

[weijian]

Should the growth story fail to realise, then people will start wondering if SS worth the pe of 20. Now when everything seems right, the margin of safety is always forgotten

Does Mr Market value SSG at P/E=20 really because it is a growth stock? Let's see...

To be a growth stock, it needs to have a growth STORY. Exciting stories frequently starts in exciting countries, eg. Myammar. So, if it ONLY operates in boring Singapore, then it needs to have a war chest to expand - through organic means like store expansion, R&D to develop new products or simply accquire competitors. From what i understand from some of the forumers, store expansion has stalled for last 6 months. Let's hope LIM seniors make their 1.7mil salary each, count in 2H13. Expansion in E-commerce and Malaysia? Isn't that written in the prospectus for 2years ago? It does has a war chest of ~50mil (cash - payables), with the majority being $ raised 2 years ago. This 'war chest' however will not be growing fast as Mgt has pledged dividend payout ratio at 90% till FY2014.

So, is Mr Market actually valuing SSG as a dividend stock instead? P/E=20 translates to ~5% (the minimum huddle for many investors to jump in), with no debt, high payout ratio of 90%, able to do your own audit by visiting its stores (to see see look look) and being a consumer staple kind of stock that is pretty recession proof. Any growth, if any, is purely icing on the cake?