Great Eastern Holding

[weijian]

@ghchua,
If we look at the historical offers by OCBC, all of them came in a space of 2-3years before the last one in 2006. VB GG once documented it here: https://www.valuebuddies.com/editpost.php?pid=29911

After those consecutive offers in just as many years, can't blame minorities for thinking that the future was bright. On hindsight, minorities were treated to a horror show as 1.5x EV became 0.5x EV in the next 18 years. Of course, past performance is not an indication of the future and so anyone's guess how this 0.7x EV price will turn out in the future.

As usual, minorities don't have a lot of 10years (or 18years). They were lucky that OPMI Hero Ong turned up for national duty. But it would be luckier for the OPMI who had learnt "How to Make Millions before Grandpa Dies". At least the mental accounting can be easier denoted as "zero".

[weijian]

For the benefit of all (and especially ghchua who will probably be bombarded by a lot of questions), I have added the graphical flow chart for a company to be delisted based on the latest listing rules.

Acknowledgments to either ghchua or dreamybear (can't remember the exact person who first shared it in the BP thread previously)

[ghchua]

After those consecutive offers in just as many years, can't blame minorities for thinking that the future is bright. On hindsight, minorities were treated to a horror show as 1.5x EV became 0.5x EV in the next 18 years. Of course, past performance is not an indication of the future and so anyone's guess how this 0.7x EV price will turn out in the future.

Hi weijian,

I have no crystal ball to predict how the market will rate GEH going forward if it continues to be listed after the offer closes. But what is quite certain is that GEH had came out with a better dividend policy since last year. So, are you going to forgo a 4+%pa dividend yielder? Granted that the market had rated down GEH in terms of EV multiples since the last offer, but the relevant question should be, will GEH's EV continue to grow going forward, as it had been since the last offer?

Focus on the fundamentals of the company, rather than what the stock market is doing.

[weijian]

Hi weijian,

I have no crystal ball to predict how the market will rate GEH going forward if it continues to be listed after the offer closes. But what is quite certain is that GEH had came out with a better dividend policy since last year. So, are you going to forgo a 4+%pa dividend yielder? Granted that the market had rated down GEH in terms of EV multiples since the last offer, but the relevant question should be, will GEH's EV continue to grow going forward, as it had been since the last offer?

Focus on the fundamentals of the company, rather than what the stock market is doing.

hi ghchua,

I don't think fundamentals and "what the stock market is doing" are exclusive in nature.

Focusing exclusively on fundamentals is just as damaging as focusing exclusively on what the stock market is doing. It is clear that there is no wisdom when something intelligent has been bought to extremes.

A 4%pa dividend yielder is cold comfort if EV multiples re-rate. Example, if the EV multiple reduces by 0.1x over 3 years, total dividends received of 12% is barely enough to cover it. One could also argue that EV will probably grow, which is true. Again, when EV multiples re-rate, most of that growth is just accounting value - can see, cannot touch. Recently SIAS asked about GEH's TSR (total shareholder returns) and the answer from Mgt makes it very clear why OPMI Hero Ong was made in the 1st place.

As a matter of fact, the appearance of any "activist" in the SGX market is simply a red flag on a company. While activists had been pretty successful in foreign markets by forcing changes for a better future, but the controlling stakes that is common in Asian markets make such "forced change" implausible.