Spindex Industries

[Shrivathsa]

Looking at the share prices over the last 5 years, Spindex has been at around the 0.8 level.

VWAP assuming they do perform a take over will likely be say 0.85.

Assuming a 20% / 30% premium, one could expect SGD 1.02 / 1.1 as take private offer.

One of the things which is frustrating is that these companies (it is a general gripe, not specific to Spindex) rarely, if ever, use the cash well.

[wj1984]

Looking at the share prices over the last 5 years, Spindex has been at around the 0.8 level.

VWAP assuming they do perform a take over will likely be say 0.85.

Assuming a 20% / 30% premium, one could expect SGD 1.02 / 1.1 as take private offer.

One of the things which is frustrating is that these companies (it is a general gripe, not specific to Spindex) rarely, if ever, use the cash well.

Agree on the frustrating part about proper cash use... maybe because they are a traditional family business that went public... old mindset still in place...

vwap over 5 years should be more than 0.85... i would say closer to 1 (0.8 to 1.35 range; don't count the covid dip)... at 0.85 vwap with those premiums is close to current market price which won't entice anyone.. but this is still wishful thinking..

[weijian]

One of the things which is frustrating is that these companies (it is a general gripe, not specific to Spindex) rarely, if ever, use the cash well.

Hi Shrivathsa,

I am curious towards your definition of "these companies".

Using cash well?

Some folks use it to keep their clan happily employed and find it rewarding. I mean, the older generation grew up as 1 big (extended) happy family and it can't get more meaningful helping your kin, isn't it? After all, many more clans broke up due to inheritance issues and if one could keep theirs happy, ain't they doing something meaningful?

Some folks don't believe in the sympathy of strangers, so it isn't wrong to keep the cash within the company coffers isn't it? After all, this is what Buffett espouses! Why pay out the cash to strangers when you (and your buddies) were the ones who took the risk, took the share price drop by the chin and endured sleepless nights/damaged relationships/impaired health to get to where you were. You (and their buddies) fully deserved everything.

I hope it is obvious by now, that "use the cash well" is very subjective.

[wj1984]

well i bought my ticket to this show many years back and still waiting for the show climax...

[dreamybear]

One of the things which is frustrating is that these companies (it is a general gripe, not specific to Spindex) rarely, if ever, use the cash well.

Hi Shrivathsa,

I am curious towards your definition of "these companies".

Using cash well?

Some folks use it to keep their clan happily employed and find it rewarding. I mean, the older generation grew up as 1 big (extended) happy family and it can't get more meaningful helping your kin, isn't it? After all, many more clans broke up due to inheritance issues and if one could keep theirs happy, ain't they doing something meaningful?

Some folks don't believe in the sympathy of strangers, so it isn't wrong to keep the cash within the company coffers isn't it? After all, this is what Buffett espouses! Why pay out the cash to strangers when you (and your buddies) were the ones who took the risk, took the share price drop by the chin and endured sleepless nights/damaged relationships/impaired health to get to where you were. You (and their buddies) fully deserved everything.

I hope it is obvious by now, that "use the cash well" is very subjective.

Brings to mind Prof Mak's point made some 15 years ago ..... so will things change in the future ? guess no one knows ...

https://www.valuebuddies.com/thread-1076...#pid171894
" https://governanceforstakeholders.com/20...ional-aim/ 
One good example is the ownership structure of our public companies. In Singapore, and much of Asia, concentrated ownership by families and founders is common, while in markets such as the US, the UK and Australia, dispersed ownership is the norm."

[dreamybear]

well i bought my ticket to this show many years back and still waiting for the show climax...

Some reasons provided by companies who list are : better visibility, more transparency to attract business partners(e.g. customers), etc. 

Spindex is a manufacturer and relies on customers for manufacturing contracts, hence I would think transparency about its financials is advantageous(or even significant) to its business.

If you don't mind, would you care to share what you think could be compelling reasons for it to be privatized ?

[wj1984]

well i bought my ticket to this show many years back and still waiting for the show climax...

Some reasons provided by companies who list are : better visibility, more transparency to attract business partners(e.g. customers), etc. 

Spindex is a manufacturer and relies on customers for manufacturing contracts, hence I would think transparency about its financials is advantageous(or even significant) to its business.

If you don't mind, would you care to share what you think could be compelling reasons for it to be privatized ?

agree on your reasons but many other companies that once listed for those reasons, they have achieved their goal of visibility and transparency and have since delisted...

my relatives are the next major SH in spindex (founding family at 75%, they are at about 10% of which 4% or so used to be under a name but since went to nominees).. they have shown that they would accept any reasonable offers like the case of SELECT deslisting.. during some fireside chat with my mum they also encourage her to buy..

anyway its just a wish... another interesting point was in recent years wee wei ling also bought into spindex.. was trying to find a link why would someone from a totally different industry be interested in it?

[weijian]

@dreamybear,
The modern stock exchange was founded by the Dutch in the 17th century as a way for insiders to cash out. I believe it hasn't changed for the last few hundred years. However, monetization methods have evolved over the years - Eg. stock options to attract talent to work for you, using your "liquid stock with a market value" as loan collateral etc.

@wj1984,
I hope your relatives didn't follow the script of "How to get rich after Grandma dies" because it would have made them less credible. And ever since I found out Chuan Hup Brilliant Founder was a customer of the nickel traders, I had the epiphany that all of us, regardless of race/religion/class/language...., are not very different after all. It is indeed interesting that the banker's daughter working in his daddy's hospitality firm, would be interested in Spindex. But then again, it is my suspect that most OPMIs vested in Spindex are not of the same industry. Matter of fact, I am personally vested in companies from 10 different industries.

[wj1984]

@wj1984,
I hope your relatives didn't follow the script of "How to get rich after Grandma dies" because it would have made them less credible. And ever since I found out Chuan Hup Brilliant Founder was a customer of the nickel traders, I had the epiphany that all of us, regardless of race/religion/class/language...., are not very different after all. It is indeed interesting that the banker's daughter working in his daddy's hospitality firm, would be interested in Spindex. But then again, it is my suspect that most OPMIs vested in Spindex are not of the same industry. Matter of fact, I am personally vested in companies from 10 different industries.

I had to read the synopsis of 'how to get rich after grandma dies' to understand your meaning... my relatives were professionals who made it in their field and had money to invest... they invested in many biz but many were not successful but one thing that I knew was successful is probably stock picking; i.e. SELECT.

That lead me to read more on spindex after noticing them on the list then i went to ask my mum who actually mention that they did ask her to buy. Since holding them for many years, my fave past time now is to see the yearly AR to check for new major shareholders and the list yields some surprises..

[dreamybear]

my relatives are the next major SH in spindex (founding family at 75%, they are at about 10% of which 4% or so used to be under a name but since went to nominees).. they have shown that they would accept any reasonable offers like the case of SELECT deslisting.. during some fireside chat with my mum they also encourage her to buy..

Thanks for sharing your thoughts. 

Well, with their stake, maybe you can suggest them to follow GE's activist example ... maybe it will lead to something, no one knows .... 
https://www.valuebuddies.com/thread-2273...#pid170558

After all, there seems to be some interesting corporate activities in the past ...
https://www.valuebuddies.com/thread-64-p...#pid137387

Just a thought, I am not vested.