Boustead Singapore

[Bibi]

So if he is reinstating back script dividend to me it means the current price is not very undervalue.

Hi Bibi,

So according to your logic, you are saying that Boustead Singapore reinstate back the scrip dividend at a "not so attractive" price to discourage participation? Then what is the point of doing a scrip dividend scheme then? So that the participation rate is low and you ended up not saving any money but also paying the service providers?

So you believe that the share price will go back to 80c? Then why are you saying that you are not increasing your stake anymore? You should sell all your shares now and buy back at 80c later.

My point is that one should not be too focused on short term share price movements. Yes, businesses are cyclical but as investors, we are focused on long term outlook of the company.

I have no intention of increasing my stake at any price above 75 cts. Sell and buy back at 80 cts later? So does that mean those who projected $1.60 and above are going to sell their everything and buy into boustead?

I stand by my words. Boustead is a large position in my portfolio and above SGD half a mil. I bet not many here hold such a large position.

[Curiousparty]

Something must be brewing … Boustead is back at $1 … a few good things coming up …

1. Boustead engineering managed to break into new segment for the heater
2. Geo spatial should continue to trend up strongly
3. Como hotel should be breaking even soon …

[ghchua]

I have no intention of increasing my stake at any price above 75 cts. Sell and buy back at 80 cts later? So does that mean those who projected $1.60 and above are going to sell their everything and buy into boustead?

Of course not. They might have a higher margin of safety for other stocks in their portfolio. There might be also other more attractive stocks that they wanted to add into their portfolio.

What I am trying to say here is the decision on scrip dividend participation per se should be done after analyzing one's portfolio, and not only focused only on that particular stock share price. Since you have stated you have a large position in Boustead Singapore in your portfolio, obviously it does not make sense to keep on adding onto that position.

Hope that the above clarifies.

[weijian]

So you believe that the share price will go back to 80c? Then why are you saying that you are not increasing your stake anymore? You should sell all your shares now and buy back at 80c later.

Hi ghchua,

Unfortunately, I may have to moderate this specific portion of your post a little bit. Please refer to the posting rules on the above sentence that I bolded.

Posting rules:
https://www.valuebuddies.com/thread-1844...#pid146191

Moderator

[ghchua]

Hi ghchua,

Unfortunately, I may have to moderate this specific portion of your post a little bit. Please refer to the posting rules on the above sentence that I bolded.

Posting rules:
https://www.valuebuddies.com/thread-1844...#pid146191

Moderator

Hi weijian,

I am sorry about the above post if you seen it as a challenge to Bibi. It was not my intention. I had used it as an illustration that focusing on share price movements too much is not useful. Rather, to decide on participation on scrip dividend scheme or add more onto a stock, it should be viewed as part of a portfolio decision and the intrinsic value one has for a stock.

As I have explained earlier, just taking the scrip dividend at a discount and then sell the same stock at the market price to lock in the "risk free" return for Boustead Singapore is not useful. Rather, looking at one's portfolio and then decide which one to sell to extract the dividend out is a more fruitful way to manage it.

[Bibi]

My apology to Weijian and ghchua for not stating upfront that its a large position in my portfolio causing the confusion and misunderstanding.

[weijian]

hi ghchua,

I believe there are VBs who may depend on the dividends for their own cashflow needs. As such, it makes total sense for them to think of ways to maximize the dividends, isn't it?

Hi weijian

I agree. Then the question should be - Is the current market price of Boustead Singapore still undervalues the company? If it is, then to extract out the dividends from Boustead Singapore scrip dividend participation, perhaps one should sell part/all of another overvalued/fairly valued stock in your portfolio to extract the corresponding dividend amount out.

My point is really, the focus is not to just extract the amount from Boustead Singapore, but look at it holistically from a portfolio perspective.

Hope the above clarifies.

Hi ghchua,

I used to think that rebalancing of the portfolio should be done accordingly to what you have described but in recent times, I start to have doubts.

Selling overvalued/fairly valued stocks and buy undervalued stocks, as part of portfolio rebalancing used to make sense to me. But upon reflection and practice evolution, it started to make less and less sense.  

So when does it make less sense? If Mr Market is "fairly accurate" of the company's future prospects, then any sort of undervaluation (persistent or not), may actually be indicative of the company's quality.

To invert, good quality companies are generally overvalued most of the time and fairly valued some of the time.

The question that I had been asking myself - Is is better to use capital to average upwards in good quality+fairly valued companies that demonstrate growth and efficient use of capital (ROIC), compared to buying "a dollar for 50 cents" companies in which its persistent undervaluation may be indicative of its quality/capital effectiveness?

After all, investing more capital into a high ROIC company at fair valuations ensures that capital is compounded at relatively quicker rates than a cheaper company with much lower ROIC. Of course, the trick is what multiples to pay for the IC (invested capital) versus how much discount is the IC selling for.

P.S. This post of mine is not indicative of the quality of BSL as a company and also its valuation. If this discussion does get longer, I will shift it to another more appropriate thread.

[LionFlyer]

I am interested in the partial scrip dividend option. How do I calculate how many share equvielent for cash versus new shares?

I was looking to add new shares but make it a round number, as opposed to having some odd lots with the full dividend value in shares.

[ghchua]

I am interested in the partial scrip dividend option. How do I calculate how many share equvielent for cash versus new shares? 

I was looking to add new shares but make it a round number, as opposed to having some odd lots with the full dividend value in shares.

Hi LionFlyer,

I do not have information on how much shares you have currently or how much scrip dividend that you are entitled to, so would not be able to work it out for you.

But in general, you just have to work backwards by using the formula that they have given on the reverse side of the scrip dividend scheme election form. You know the number of new shares that you wish to take for scrip dividend (obviously will be lesser than the number shown in your election form for full share election) to round up to the nearest 100 shares (to avoid odd lots), so you can just reverse engineer out the number of existing shares that you need to receive dividend in new shares using the formula given.

Subtracting the number of existing shares to receive dividend in new shares computed using the formula from your existing holdings indicated in your election form, it will be the number of existing shares to receive dividend in cash.

Hope that the above helps.

[LionFlyer]

I am interested in the partial scrip dividend option. How do I calculate how many share equvielent for cash versus new shares? 

I was looking to add new shares but make it a round number, as opposed to having some odd lots with the full dividend value in shares.

Hi LionFlyer,

I do not have information on how much shares you have currently or how much scrip dividend that you are entitled to, so would not be able to work it out for you.

But in general, you just have to work backwards by using the formula that they have given on the reverse side of the scrip dividend scheme election form. You know the number of new shares that you wish to take for scrip dividend (obviously will be lesser than the number shown in your election form for full share election) to round up to the nearest 100 shares (to avoid odd lots), so you can just reverse engineer out the number of existing shares that you need to receive dividend in new shares using the formula given.

Subtracting the number of existing shares to receive dividend in new shares computed using the formula from your existing holdings indicated in your election form, it will be the number of existing shares to receive dividend in cash.

Hope that the above helps.

Thanks. I found it (paragraph 9).