Boustead Projects

[hh488]

Hi Chua-san

I was one of those who accepted their offer of 95 cts months back. Question is will those who accepted earlier (mine included) will also be entitled to the revised offer?

[ksir]

My plan is to tender my BP and reallocate a portion to BSL (being the one gotten the good undervalued BP, but with doubts on BSL management).

Hi ksir,

Your strategy is not new. In fact, some BP shareholders who accepted the previous offer had done the same, and had enjoyed a higher final dividend payout from BSL than remaining in BP.

The question now is - Will you be able to get a decent price to allocate to BSL after you received the proceeds from BP?

Actually now that their offer price to BP is more decent, it means BSL actually gets lesser value now as compared to previous round when they paid 0.95.
When the BSL was valued low by Investor (their share price) then, why they should price it higher now? 
If the reason is their ex-BP units (EE & Geospatial) are now performing far better, I am more than happy to value it higher as well. 
Below 0.9 is still quite a value to me. I am happy to re-allocate some of my BP proceeds to BSL.

Their EE is surprisingly strong and the switch to more sustainable energies projects seem to be going well as well. 
I am more optimistic than I ever be in my 12+ years investing in BSL and looking forward for their numbers in 3 years time.

[ksir]

My plan is to tender my BP and reallocate a portion to BSL (being the one gotten the good undervalued BP, but with doubts on BSL management).

Hi ksir,

Your strategy is not new. In fact, some BP shareholders who accepted the previous offer had done the same, and had enjoyed a higher final dividend payout from BSL than remaining in BP.

👆 the bolden one piques my interest though.
Let's do a sample calculation:
Let's say I have 10,000 shares of BP.

Scenario 1:
If I accept the offer at S$1.18, the difference is S$2300 vs S$0.95 then.
+ dividend from BP S$140.

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

Actually I hedged my bet also, I accepted half and kept half, so it's not an exercise to show off. It's just quite interesting to see the figure.

[psnijders]

I'm curious what the exit offer will be. I still hold some shares. In the previous offer, the IFA indicated an estimated valuation range of between $1.17 and $1.38. Will a "fair and reasonable" offer this time be somewhere in that range? Or will they be able to get away with a lower offer than that?

Hi psnijders,

The previous IFA opinion is irrelevant now if they are making an exit offer. They have to appoint another IFA to provide an opinion, which might use different methods to evaluate the offer. Also, do take note that due to market conditions, most of the comparable companies have traded down since the last offer, and the estimated valuation range (if they use this method) might change as well.

I'm happy to see the much improved offer of $1.18 today. The price offered is within the valuation range of the previous offer, as I had hoped. It will still be interesting to see the IFA's opinion on the current offer.

Also notable is that FF Wong now also wants to sell his stake to the offeror. He needs shareholder approval (interested person transaction) from Boustead Limited shareholders to be able to do so.

I was one of those who accepted their offer of 95 cts months back. Question is will those who accepted earlier (mine included) will also be entitled to the revised offer?

No, I can't see that happening. People who accepted the previous offer did so out of their own free will. All conditions were clearly described. There were also people who did not accept and who held out for a higher offer. They took a certain risk in doing so. That they now get a higher (and IMO fairer) price is perhaps unpleasant to some of the people who accepted the previous offer, but the fact of the matter is that the people who accepted the previous offer could have chosen to reject it. 

Regardless, I think it is good to remember the outcome here and use this case in evaluating future offers like this at other listed companies.

[ghchua]

Actually now that their offer price to BP is more decent, it means BSL actually gets lesser value now as compared to previous round when they paid 0.95.
When the BSL was valued low by Investor (their share price) then, why they should price it higher now? 
If the reason is their ex-BP units (EE & Geospatial) are now performing far better, I am more than happy to value it higher as well. 
Below 0.9 is still quite a value to me. I am happy to re-allocate some of my BP proceeds to BSL.

Their EE is surprisingly strong and the switch to more sustainable energies projects seem to be going well as well. 
I am more optimistic than I ever be in my 12+ years investing in BSL and looking forward for their numbers in 3 years time.

Yes, BSL will get lesser value now for BP at $1.18 per share. But they still get value at this price because they are paying below RNAV and also get to share less or even no minority interests for future BP earnings.

I think if you look at their latest HY result, both EE and Geospatial did well. Healthcare segment losses also narrowed. So, yes, the market had value it higher.

[ghchua]

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

I think you should also take into account the fact that the market is valuing BSL higher now as compared to few months back. Plus, what price you will be able to reinvest your BP proceeds into BSL when you have received it.

Having said that, I think your strategy of accepted half and keep half looks sound to me. At least you won't miss out on BSL upside as you hold onto some of your BP shares currently.

[ksir]

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

I think you should also take into account the fact that the market is valuing BSL higher now as compared to few months back. Plus, what price you will be able to reinvest your BP proceeds into BSL when you have received it.

Having said that, I think your strategy of accepted half and keep half looks sound to me. At least you won't miss out on BSL upside as you hold onto some of your BP shares currently.

That's true, but it could also be that BSL price later on would be lower. So I'd not think too much into that.

Actually I preferred to keep at least 80% but I was unpleasant of the possibility of holding unlisted BP and relying on Management who in first place not taking care of minority shareholders. 

Below from ps.... quite interesting though:
"Regardless, I think it is good to remember the outcome here and use this case in evaluating future offers like this at other listed companies."

When I hazard a possible future scenario of BSL offering S$0.90-0.95 and knowing what they have done with BP, would I keep 100% and not accepting the offer?
After considering, I think I would still take the same decision, accept 50% keep 50%.

The thought of getting stuck in unlisted BSL with lowball-offer Management (if ever be) is quite unpleasant even to imagine.

[Bibi]

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

I think you should also take into account the fact that the market is valuing BSL higher now as compared to few months back. Plus, what price you will be able to reinvest your BP proceeds into BSL when you have received it.

Having said that, I think your strategy of accepted half and keep half looks sound to me. At least you won't miss out on BSL upside as you hold onto some of your BP shares currently.

That's true, but it could also be that BSL price later on would be lower. So I'd not think too much into that.

Actually I preferred to keep at least 80% but I was unpleasant of the possibility of holding unlisted BP and relying on Management who in first place not taking care of minority shareholders. 

Below from ps.... quite interesting though:
"Regardless, I think it is good to remember the outcome here and use this case in evaluating future offers like this at other listed companies."

When I hazard a possible future scenario of BSL offering S$0.90-0.95 and knowing what they have done with BP, would I keep 100% and not accepting the offer?
After considering, I think I would still take the same decision, accept 50% keep 50%.

The thought of getting stuck in unlisted BSL with lowball-offer Management (if ever be) is quite unpleasant even to imagine.

I am a shareholder of BSL for many yrs. BSL has to take care of its own shareholders. If the table is turned around and say BP were to offer 0.95 vs 1.18 to take over BSL. How will u feel? Will u feel as a shareholder of BP yrself. Will u feel BP is offering a low ball offer to BSL and shld give BSL higher?

[ksir]

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

I think you should also take into account the fact that the market is valuing BSL higher now as compared to few months back. Plus, what price you will be able to reinvest your BP proceeds into BSL when you have received it.

Having said that, I think your strategy of accepted half and keep half looks sound to me. At least you won't miss out on BSL upside as you hold onto some of your BP shares currently.

That's true, but it could also be that BSL price later on would be lower. So I'd not think too much into that.

Actually I preferred to keep at least 80% but I was unpleasant of the possibility of holding unlisted BP and relying on Management who in first place not taking care of minority shareholders. 

Below from ps.... quite interesting though:
"Regardless, I think it is good to remember the outcome here and use this case in evaluating future offers like this at other listed companies."

When I hazard a possible future scenario of BSL offering S$0.90-0.95 and knowing what they have done with BP, would I keep 100% and not accepting the offer?
After considering, I think I would still take the same decision, accept 50% keep 50%.

The thought of getting stuck in unlisted BSL with lowball-offer Management (if ever be) is quite unpleasant even to imagine.

I am a shareholder of BSL for many yrs. BSL has to take care of its own shareholders. If the table is turned around and say BP were to offer 0.95 vs 1.18 to take over BSL. How will u feel? Will u feel as a shareholder of BP yrself. Will u feel BP is offering a low ball offer to BSL and shld give BSL higher?

I am BSL shareholder for 12+ years also.
I did go through the similar thought process also. 
If this were another company and not BP, isn't it better for BSL to offer lowball and benefit us, the shareholder? I think the answer is obvious, yes.

But this is BP and the fact is, it's the subsidiary of BSL and shareholders of BSL & BP are intertwined. It's like if you are acquiring your younger brother company and offer lowball to his and his family & partners , I'd say WTH right and because BSL is controlling BP, BP in this case done almost nothing to self-defend?

If this is the attitude, why not also lowball offer for BSL later on? 
I don't think minority shareholders of BSL is priority also?
This is principle on how they treat minority shareholders of BP and that reflect the future-likelihood of how they might treat minority shareholders of BSL. 

Think I better stop here, otherwise it might not be good for our interests as BSL shareholders also? hahaha.

[Bibi]

Scenario 2:
If I accepted the offer at S$0.95 then and managed to buy BSL at low price of S$0.8, I would have gotten 11,875 shares of BSL. 
The dividend I would have gotten is 0.25+now declared 0.15, totaled to S$475.

So the difference of scenario 1 vs scenario 2 is S$2440 - S$475 = S$1965.
Or 20% more than if I accepted then.

I think you should also take into account the fact that the market is valuing BSL higher now as compared to few months back. Plus, what price you will be able to reinvest your BP proceeds into BSL when you have received it.

Having said that, I think your strategy of accepted half and keep half looks sound to me. At least you won't miss out on BSL upside as you hold onto some of your BP shares currently.

That's true, but it could also be that BSL price later on would be lower. So I'd not think too much into that.

Actually I preferred to keep at least 80% but I was unpleasant of the possibility of holding unlisted BP and relying on Management who in first place not taking care of minority shareholders. 

Below from ps.... quite interesting though:
"Regardless, I think it is good to remember the outcome here and use this case in evaluating future offers like this at other listed companies."

When I hazard a possible future scenario of BSL offering S$0.90-0.95 and knowing what they have done with BP, would I keep 100% and not accepting the offer?
After considering, I think I would still take the same decision, accept 50% keep 50%.

The thought of getting stuck in unlisted BSL with lowball-offer Management (if ever be) is quite unpleasant even to imagine.

I am a shareholder of BSL for many yrs. BSL has to take care of its own shareholders. If the table is turned around and say BP were to offer 0.95 vs 1.18 to take over BSL. How will u feel? Will u feel as a shareholder of BP yrself. Will u feel BP is offering a low ball offer to BSL and shld give BSL higher?

I am BSL shareholder for 12+ years also.
I did go through the similar thought process also. 
If this were another company and not BP, isn't it better for BSL to offer lowball and benefit us, the shareholder? I think the answer is obvious, yes.

But this is BP and the fact is, it's the subsidiary of BSL and shareholders of BSL & BP are intertwined. It's like if you are acquiring your younger brother company and offer lowball to his and his family & partners , I'd say WTH right and because BSL is controlling BP, BP in this case done almost nothing to self-defend?

If this is the attitude, why not also lowball offer for BSL later on? 
I don't think minority shareholders of BSL is priority also?
This is principle on how they treat minority shareholders of BP and that reflect the future-likelihood of how they might treat minority shareholders of BSL. 

Think I better stop here, otherwise it might not be good for our interests as BSL shareholders also? hahaha.

I think the reason u think that way could be becos u owned both BSL and BP. But for some reason lets say u only own BSL, u wont prefer BSL to offer 1.18 instead of 0.95 to BP right?