LHT Holdings

[ksir]

Dear all,

LHT had certainly done well lately in terms of share price! Year to date, it is up more than 30% and still going strong. A value trap? Certainly not, in my opinion.

This case study had underscored my view to always stay patient with stocks, especially when you do value investing. A stock can do nothing for years, but when it moves, it can surprise everyone, including myself sometimes.

Exactly, imho, value trap sounds like an excuse to say you don't understand why & what you buy in the first place. There is no such thing as value trap or growth trap, it's just a matter of you are right or wrong.

[dydx]

Even though it is a small business, it pays to get to know LHT better....
https://www.lht.com.sg/
https://www.lht.com.sg/wp-content/upload...t-2022.pdf
https://links.sgx.com/FileOpen/LHT-Holdi...eID=768753
https://www.lht.com.sg/2023/11/14/22-25-sep/

[RBM]

Even though it is a small business, it pays to get to know LHT better....
https://www.lht.com.sg/
https://www.lht.com.sg/wp-content/upload...t-2022.pdf
https://links.sgx.com/FileOpen/LHT-Holdi...eID=768753
https://www.lht.com.sg/2023/11/14/22-25-sep/

Thank you for encumbering this thread with some facts dydx. Appreciated. Buddies may want to cast their eyes on LHT’s cash and indebtedness positions.

In addition to the factual points dydx makes, I would add that MD Ms. Yap persists in adding to her holding in the Company. And today, LHT’s share price hit an all time high, albeit at typically pharmaceutical levels of liquidity.

I’m wondering if there is further upside to the dividend? Yes, thats a question, not a fact… but the numbers point to a demonstrable capacity to raise it further. 

If this is a “value trap” (whatever that means)…. then please entrap me in more of this kind of value.

Vested (for longer than my aged mind can remember… and I intend hanging on).

[¯|_(ツ)_/¯]

@R - nice to hear from you and thanks a lot for your kind sharing.  I always says that I'm in debt to all valuebuddies and for this case ... it would be you. 

Looking at my trading record, I started my market operation during C19 and paper gain is nearly 60% (58.95%).

With ping from Sifu Chua, seems that the jump was only few days ago and let's hope that the trend could continue. 

Gratitude and really appreciate your kind sharing - once again.
Enjoy:


Gratitude!

[weijian]

Dear all,

LHT had certainly done well lately in terms of share price! Year to date, it is up more than 30% and still going strong. A value trap? Certainly not, in my opinion.

This case study had underscored my view to always stay patient with stocks, especially when you do value investing. A stock can do nothing for years, but when it moves, it can surprise everyone, including myself sometimes.

Exactly, imho, value trap sounds like an excuse to say you don't understand why & what you buy in the first place. There is no such thing as value trap or growth trap, it's just a matter of you are right or wrong.

@ksir,
I seek to defer that there are no such things as value trap or growth trap.

Just ask those who lost money averaging down in leveraged entities, those that eventually turn out to be frauds or ones where the mgt continues to allocate capital in a non-OPMI friendly way. Or ask those in 2021 who bought promising companies on their way to greatness. But when the environment changed, greatness didn't look as certain as it used to be.

Just because we know how to avoid them, doesn't mean they don't exist.

A person who has the tendency to buy cheap (eg. low P/E or P/B) has a tendency to fall for value traps. Because a large portion of their original hypothesis was cheapness. So as it got cheaper quantitatively, they may be blinded by the quantitative aspect and miss out that Mr Market may have valued it correctly from a qualitative perspective. As they average down, they may eventually find themselves losing anything from 50-80% of original capital.

A person who has the tendency to buy quality (valuation based on price to sales) has a tendency to fall for growth traps. Because a large portion of their hypothesis was about growth, as long as the growth story stays intact and passes their qualitative checks, they forgot that growth have slowed down or the trend buyers have decided to exit and take profits. Eventually, because they bought at/near ATH, they may eventually find themselves losing anything from 50-80% of original capital.

@ghchua,
I look at the price history of LHT Holdings and saw that it increased ~20% in just a few days. I am genuinely surprised there wasn't a SGX query. Wouldn't be surprised that some corporate action has been leaked in advance of time...

[ksir]

Dear all,

LHT had certainly done well lately in terms of share price! Year to date, it is up more than 30% and still going strong. A value trap? Certainly not, in my opinion.

This case study had underscored my view to always stay patient with stocks, especially when you do value investing. A stock can do nothing for years, but when it moves, it can surprise everyone, including myself sometimes.

Exactly, imho, value trap sounds like an excuse to say you don't understand why & what you buy in the first place. There is no such thing as value trap or growth trap, it's just a matter of you are right or wrong.

@ksir,
I seek to defer that there are no such things as value trap or growth trap.

Just ask those who lost money averaging down in leveraged entities, those that eventually turn out to be frauds or ones where the mgt continues to allocate capital in a non-OPMI friendly way. Or ask those in 2021 who bought promising companies on their way to greatness. But when the environment changed, greatness didn't look as certain as it used to be.

Just because we know how to avoid them, doesn't mean they don't exist.

A person who has the tendency to buy cheap (eg. low P/E or P/B) has a tendency to fall for value traps. Because a large portion of their original hypothesis was cheapness. So as it got cheaper quantitatively, they may be blinded by the quantitative aspect and miss out that Mr Market may have valued it correctly from a qualitative perspective. As they average down, they may eventually find themselves losing anything from 50-80% of original capital.

A person who has the tendency to buy quality (valuation based on price to sales) has a tendency to fall for growth traps. Because a large portion of their hypothesis was about growth, as long as the growth story stays intact and passes their qualitative checks, they forgot that growth have slowed down or the trend buyers have decided to exit and take profits. Eventually, because they bought at/near ATH, they may eventually find themselves losing anything from 50-80% of original capital.

@ghchua,
I look at the price history of LHT Holdings and saw that it increased ~20% in just a few days. I am genuinely surprised there wasn't a SGX query. Wouldn't be surprised that some corporate action has been leaked in advance of time...

@weijian,
I sincerely hope we already passed the value vs growth discussion (which to be clear, I no longer see the labeling provide any value).

With that cleared, we are left with the "trap" part.
That trap part is also peculiar, how to define an investment is a trap? 
Anything we got stuck with? 

Is Tencent a trap? After its share price dropped back to 2017 price (means 6 years of nothing? or is it?).
Or Sing Shipping is a trap? since its price not moving at all? 
are BP and Boustead double traps?
To me, the answers are NO, to some or most maybe the answers are Yes.
And why I think so? I appreciate their earning & cashflow these few years, which I think are great and with the buyback and dividend I am quite satisfactory and Mr Market just keep throwing opportunity for me to add more (whenever I have idled cash).

If I invest in something and I average down, it's because I think the value I gotten out of it is less than the price I paid.
Why then should I think it's a trap?
Even if it turns out to be a fraud, it's just my own mistake. 
My mistake in assessing the management and the company numbers and whatnot.

For argument sake, LHT a month ago with its price stagnant for few years, is it a value trap? To many, of course. To those who know the numbers & confident of their assessment of the management, of course not. 

So is the Trap thingy defined by Mr Market's price?

[weijian]

Hi ksir,

We are definitely past that discussion. Personally, I don't see the labelling stocks provide value as well. But I do see different classes of people losing money based on behavioral biases and type of investment profile, as I had described.

Now back to your questions. Of the 4 companies you mentioned, I have only studied 3 of them - Boustead Spore, Boustead Projects and LHT Holdings. To me, these 3 companies are all not value traps with reasoning as below:

Boustead Spore/Projects: In FY21, value was unlocked by selling their industrial property portfolio into a fund, which they will manage. Been the child, BP had to pay upwards for the parent to benefit from the profits and OPMIs got to benefit as well. BP paid a total of 45mil ordinary/special dividends, while parent Boustead Spore then paid total of 39mil ordinary/special dividend (notice the difference in absolute payments and this is why structure is very important). So FF Wong has demonstrated his ability to unlock value and more importantly, willingness to share it. In my own judgement, there are still other observations (abeit less impactful) that had demonstrated to me that they are not value traps but for simplicity sake, I believe this single unlock/share value event is more than enough.

LHT Holdings: This is less obvious than Boustead. Besides the 3 EDs, there are 6 other family members working in the company and related party transactions of ~600k per annum providing transport services. Normally theses are potential red flags. Business-wise, it has been a beneficiary of Covid-19 and in FY22 (good year), the 3 executive directors took home ~1-1.2mil in salaries while taking home 1.5mil in dividends from their 58% stake. This is evidence of alignment with OPMIs.  In earlier good years, they also paid out good dividends. In poor years (the few years before covid struck in 2020), dividend was lower but the EDs' combined salaries were similarly lower. So in essence, due to the alignment of interests, I don't classify it as a value trap.

As for Sing Shipping, once I knew that the chairman also controlled another property developer/owner that kindly donated 2mil to some investor education fund recently, I did not bother to spend my time studying up on it. And yes, the other company is a value trap IMHO.

Finally, market price can be construed as a preliminary indicator. Frequently, they are not very wrong when the prices keep on reducing. Of course, it is up to us to decide whether they are wrong or not, ie. not very wrong doesn't mean you can't be wrong. But ultimately, market prices is just a reflection. It is still the structure and actions of Mgt that determine so (Did you unlock value? Are you sharing value? How are you profiting from your ownership - mainly through salaries/country club membership? or employing your entire clan? or doing loop-sided related party transactions?)

[¯|_(ツ)_/¯]

Thanks WJ for sharing your thought.

Given that BP paid 45m dividend vs 39m paid by BS, would this changed after BP delisted? For me, I'm not sure, but I'm willing to stay a bit longer as a BP investor and find out.

Few years ago, when I decided to vest in BP, I was toying between BP vs BS aka should I go in 50:50 between BP and BS or should I go BS 100% or what.

I'm fully aware of BS value but I thought BP has a better growth story.  In the end, I choose BP as I thought my runway are pretty long and the result of BP would be much better than BS in the long run (due to it's growth potential).

The decision was not easy and it took me quite some time to decide.

---------------------------

LHT - yes, it only moved recently and based on what I observe/think, the movement looks legitimate.  Only question is whether the uptrend is sustainable. 

--------------------------

Sing Shipping - yes, it's chairman is rather notorious and we shall not says too much.  Just saying that I'm vested and the dividend is rather fixed 1cts (except during C19 FY2021 was halved 0.5cts). 

At this moment, I'm net buyer as I see quite a few great opportunities (coming).

Enjoy:


Gratitude!

[ksir]

Hi ksir,

We are definitely past that discussion. Personally, I don't see the labelling stocks provide value as well. But I do see different classes of people losing money based on behavioral biases and type of investment profile, as I had described.

Now back to your questions. Of the 4 companies you mentioned, I have only studied 3 of them - Boustead Spore, Boustead Projects and LHT Holdings. To me, these 3 companies are all not value traps with reasoning as below:

Boustead Spore/Projects: In FY21, value was unlocked by selling their industrial property portfolio into a fund, which they will manage. Been the child, BP had to pay upwards for the parent to benefit from the profits and OPMIs got to benefit as well. BP paid a total of 45mil ordinary/special dividends, while parent Boustead Spore then paid total of 39mil ordinary/special dividend (notice the difference in absolute payments and this is why structure is very important). So FF Wong has demonstrated his ability to unlock value and more importantly, willingness to share it. In my own judgement, there are still other observations (abeit less impactful) that had demonstrated to me that they are not value traps but for simplicity sake, I believe this single unlock/share value event is more than enough.

LHT Holdings: This is less obvious than Boustead. Besides the 3 EDs, there are 6 other family members working in the company and related party transactions of ~600k per annum providing transport services. Normally theses are potential red flags. Business-wise, it has been a beneficiary of Covid-19 and in FY22 (good year), the 3 executive directors took home ~1-1.2mil in salaries while taking home 1.5mil in dividends from their 58% stake. This is evidence of alignment with OPMIs.  In earlier good years, they also paid out good dividends. In poor years (the few years before covid struck in 2020), dividend was lower but the EDs' combined salaries were similarly lower. So in essence, due to the alignment of interests, I don't classify it as a value trap.

As for Sing Shipping, once I knew that the chairman also controlled another property developer/owner that kindly donated 2mil to some investor education fund recently, I did not bother to spend my time studying up on it. And yes, the other company is a value trap IMHO.

Finally, market price can be construed as a preliminary indicator. Frequently, they are not very wrong when the prices keep on reducing. Of course, it is up to us to decide whether they are wrong or not, ie. not very wrong doesn't mean you can't be wrong. But ultimately, market prices is just a reflection. It is still the structure and actions of Mgt that determine so (Did you unlock value? Are you sharing value? How are you profiting from your ownership - mainly through salaries/country club membership? or employing your entire clan? or doing loop-sided related party transactions?)

Hi weijian,
Thanks for the reasoning and details.

Actually I don't think there is much value in discussing whether the companies are value/growth trap or not, mainly because it is subjective. 
When the valuation is attractive enough even SL is not a trap for some investors. Even to me, I might look at its valuation and assess its Management risk and if I really got no other good options to invest in, might consider to get onboard.
Hey give me 10% of (normalized) dividend yield and I don't mind considering.

And another actually, I should even support this kind of labelling ie: value trap, growth trap etc, as it throws opportunities when companies under my circle of competence are labelled as trap and being avoided like plagues. 

My 2cents why I think this labelling has negative value is because it provides Investor with the excuse to outsource their mistakes to the label.
>> Hey, it's not my mistake, it's a value trap/growth trap companies.  Most people hit by that, not my own mistakes.

And by having that excuse, the valuable lessons of investment mistakes are not assessed and learnt. 
The only learning from this labelling is >> Avoid Value/Growth Trap!
But again, human is reasonable, we can find any reasons to classify something as trap when the price/earning not moving the way we wanted or expected.

[weijian]

hi ksir,

Thanks for your views. Indeed, views from participants of the market are generally diverse. This is why we see that we have "sufficiently efficient market". And if everyone is generally tilted towards bullish or bearish, then we are going to get to the extremes and generally the extremes are where money is made/lost as the market gets more inefficient (than efficient).

We know that the odds of making money is governed by this equation --> odds of been right ("A") x how much you make when you are right ("B"). When certain companies get really cheap, "B" may get really high, especially if they are backed by real assets/functioning business. So the key is assessing "A". Just that sometimes for "certain companies", the odds would be akin to buying 4D. Sure, you may win after buying long enough (or waiting in our context). But my personal preference is that in the absence of a market crisis, i would put more emphasis on "A" than "B".

Finally, we can't control how other people think/act about such labels. Just because they misuse it, doesn't mean I m going to misuse it or those labels ain't useful for me.

P.S. In my earlier post, I left out my opinion on Tencent. In general, I haven't studied Tencent in detail but how the share price moved isn't a big consideration. It is definitely more attractive as an investment now compared to a few years back when its share price was higher - The company is now unlocking value by distributing its investments as dividend in specie and peak regulation has passed. On aggregate, I don't think it is any trap, previously or now.