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13-10-2017, 03:12 PM
(13-10-2017, 02:50 PM)ksir Wrote: The 2 parameters are just to point 2 out of the MANY.
To invert, why do you think the Management interest is aligned with Opmi?
To me, to point out few more what they have done:
1. Take “exciting” construction projects with tiny or negative margin, guess you can name a few of them better than i could.
I’d say Management interest is in “enriching” their “boast” list and not optimising profit or sustainable business for OPMI (study on TTJ as compared to Yongnam points out which is more aligned with opmi).
2. Get into hype (greentech, ppvc etc)
Those could be “future” but first mover don’t necessary have the advantage but surely have to bear the cost.
Independently, those decisions are NOT bad to opmi but if we compared to the alternative of buying back shares at S$0.16 (at the time when they made those decision), the result is damaging to all shareholders.
Management with interest alignment with shareholder would compare the return of buying back shares (which is ridiculously high bar) as compared to any projects that they are trying to venture into.
I reduced my stakes once it’s clear that the interest of management is not aligned with opmi.
I kept some of my stakes because it is damn undervalued and hoping that some outside parties will have the same view and come in to disrupt the status quo! Which probably is currently wip.
Ah yes.
Thanks for bringing these up.
Couldn't agree more with you on these points, as this is what I mean too.
We have to look at everything in totality, all these subtle information added up together, tells us about the management's alignment with MI.
Unless you've a personal errr "experience" with the management, I think anyone would agree the threat automatically qualifies the management as being "not very shareholder friendly"!
Having said all that, I think we have to give credit where credit is due.
Since my correspondence with them, they have initiated a massive share buyback, gotten the chairman of Pintaras on board, and he's now the 2nd largest shareholder.
I think it'd be unfair to say why didn't they buy back when it was at $0.16. They can't time the markets any better than we do.
Not to mention they'd have to take into account their current cash and future capital requirements before initiating a buy back program.
So we will have to let that slide.
So ironically, despite my comments, if we look at management's actions over the past 12 months, they've actually been extremely shareholder friendly. (like I said, give credit where it's due)
This is something I was not expecting. They have had no track record of share buybacks, and we can say it's undervalued, and any valuebuddy here can crunch some numbers and arrive at the same conclusion, but the fact is they've never bought back their undervalued shares.
Till now.
And now, their buy back is for an extremely extended period of time, is very aggressive, and they seem determined to support the share price.
Now, the other thought I had initially, was that perhaps Dr Chiu's purchases were not welcome. Their buy backs were to defend against a hostile takeover, but looking at the share buyback activity vs Dr Chiu's purchases, I am convinced that that's not the case.
In any event, if the management were worried, they could've issue options to themselves, and/or started a poison pill type of defence, similar to what several US companies do in anticipation of a hostile accumulation of their shares.
