12-05-2024, 11:52 AM
(11-05-2024, 01:32 PM)weijian Wrote: Hotel operations and ownership is a cash intensive business. To be fair, the Mgt is pretty aligned to OPMIs and the latter have been rewarded with special dividends from past asset sales. During those asset sales, Mgt did not have their salaries running to the roof (as many others did) but they benefitted from the special dividends.
So if OPMIs tag along, they have to acknowledge ownership is part of HGC's business model and accept that low ROE is the feature.
Hi weijian,
Though minorities can accept that HGC is a low ROE business, they were puzzled with the reduction in dividends. Remember during pre-Covid days, HGC was paying around 4c to 5c per share yearly dividend (with a scrip option, which some minorities were unhappy about it as they view it as an indirect way for the controlling shareholders to increase their stake in the company). What I am comparing here is the normal yearly dividend payouts, excluding special dividends from asset disposals.
After Covid, even when the World resume physical travelling, HGC had not restore their dividend payout back to those levels. What we have seen is that dividend payout had been around 2c per share, or only 50% of what it was previously. This despite the company having a healthy cash balance of around the same or even better than pre-Covid days. Although operating profits had came down, they certainly have the reserves to pay out more.