Valuetronics Holdings

[rainmaker]

Phillip Securities counter report.

http://singaporestockmarketnews.blogspot...s.html?m=1

thanks for the update.
The price is now making this interesting.

It's quite a surprise to see such a response from a broking house. Whether Valuetronics is the preferred subcon or not is left for Phillip (or even a new owner) to decide. Who says LED cannot be taken over by other manufacturers? If Valuetronics want to dispel the market speculation, then CEO should come out to clarify the rumours of their agreements. Or do a share buyback instead of their mgmt dumping their shares. Phillip is definitely acting on behalf of their clients who may be stuck with big sum. Look at all their target prices set for stocks this year versus their actual prices and you will realize their poor analysis. If this rumour turn to be true, then those who followed their advice will turn sour. Should avoid it unless you are doing a trading or extreme confident of the Valuetronics business.

[NTL]

As mentioned way earlier in this forum, I am also generally uncomfortable with share option remuneration with immediate vesting periods, and with management selling out almost instantly upon vesting. The rationale for using share options as remuneration is to have management interests tied in with common shareholders, but if the vesting period is immediate, the price is at the market price or lower, and if management sells out immediately, then the whole exercise is simply to use the shares as "currency" to reward management and that's a real negative IMO.

Can you quote a few examples of this happening?

It's really a bitch to go through the past records to find these, it's readily available data on sgx site:

ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 18 February 2014 it received written exercise notices for an aggregate of 2,987,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-
Number of Options exercised
Number of Option Shares
Exercise price per Option Share
Aggregate exercise price
1
350,000
350,000
S$0.150
S$52,500
2
850,000
850,000
S$0.160
S$136,000
3
1,787,500
1,787,500
S$0.174
S$311,025
TOTAL
2,987,500
2,987,500
S$499,525
In satisfaction of the exercise of options under the ESOS, the Company had issued 2,987,500 new shares in the capital of the Company (the “New Shares”) on 24 February 2014.
The New Shares, when allotted and issued, rank pari passu in all respects with the then existing ordinary shares in the capital of the Company (“Shares”).
Immediately upon completion of the issue of the New Shares, the number of issued and paid-up capital of the Company has increased from 365,388,750 Shares (excluding treasury shares) to 368,376,250 Shares (excluding treasury shares).

Note exercise price: $0.15,$0.16,$0.174
Announcement dated 26 Feb 2014.
I cant rem the price then, but it is certainly very substantially above the exercise price.

as recent as 19 Aug 2014
ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 16 August 2014 it received written exercise notices for an aggregate of 1,637,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-

Exercise price $0.174
In Aug, the share price was prob above $0.40?
In AR 2013, Hung Kai Wing was listed as no.4 top SH with 27,714,737 shares
In AR 2014, he's no.7 with 14,202,237 shares

I rem there were other disposals after exercising options, in 2012 and earlier too when I previously analysed this

Those announcements quoted are exercising of options, and selling of shares. But they do not indicate that the directors sell them off immediately right after.

Anyway, since I asking you to do the exercise, I should do my part too.

Based on AR13, those options with prices are granted from 2010 to 2011. Vesting period starts from 2012 to 2013, which is 2-3yrs after they are granted, and those options are exercisable from Aug2012 to Oct2013. The option prices of $0.15 to $0.174 are issued based on share prices at 2010-2011. As I mentioned in a previous post, they offer options at around 20% below the prices then, and I do not know if this is the usual practice.

If you refer to 19Aug announcement on grant of options, the option price is $0.406, which is 20% below the price of $0.50 then. They are only allow to exercise after 2-3yrs too. Guess you won't see them exercising them if the price stay at current level.

As for Hung exercising his options in Feb, and selling off his shares in Apr this year, this is probably due to him stepping down from Valuetronics board. Well... At least that is what I think as employees usually lost their options once they left the company.

Other incidents of selling of shares:

- In Mar2012, 2 of the directors sold their shares right before they announced the shutting off their licencing business. That incident really did left a sour mark to me.

- Since 2010, Wong (Director, Plastic Division) did some massive sales of his shares over an extended period until he went down the radar, and out of the Top20 list. No options were ever granted to him, as only the EDs are entitled to options.

There are no other announcement that I can find that the directors were selling. Exercising options, yes, to collect dividends. Selling shares, no.

[GFG]

As an interesting exercise, we can compare the valuations of valuetronics to another company I previously analysed, CDW Holdings. There are a lot of similarities:

1) Both are manufacturers with operations in HK/China
2) Valuations for both are "cheap". PE ratios are around 5
3) Management for both companies reward themselves with share options with exercise prices substantially below market price
4) Both companies have a major client which accounts for a very substantial portion of revenue.
5) Dividend yields for both are attractive: between 6-10% easily
6) Both have now "uncertainty" in their revenue streams stemming from the potential loss of part or all of the business with their one major client

It's a long tenuous exercise, but if you had the 10mil to put into just 1 company, which would you buy?

[Ray168]

Agreed with rainmaker's view that VE management should clear the air (haze).

On the other hand, KimEng super bearish report is also base on assumption that Valuetronics CE is worthless.

This is similar to Glaucus Research on ChinaMinzhong.

Phillip Securities counter report.

http://singaporestockmarketnews.blogspot...s.html?m=1

thanks for the update.
The price is now making this interesting.

It's quite a surprise to see such a response from a broking house. Whether Valuetronics is the preferred subcon or not is left for Phillip (or even a new owner) to decide. Who says LED cannot be taken over by other manufacturers? If Valuetronics want to dispel the market speculation, then CEO should come out to clarify the rumours of their agreements. Or do a share buyback instead of their mgmt dumping their shares. Phillip is definitely acting on behalf of their clients who may be stuck with big sum. Look at all their target prices set for stocks this year versus their actual prices and you will realize their poor analysis. If this rumour turn to be true, then those who followed their advice will turn sour. Should avoid it unless you are doing a trading or extreme confident of the Valuetronics business.

[LLS]

NTL u have a strong vested interest is it? thats why u defending valuetronic so strongly?

[roxhockey]

I do agree that Maybank putting zero value in the business does not make sense. Glacius claimed Minzhong was fraudulent so it had no value. In this case the Maybank analyst doesn't seem to understand what a spin off is.

[NTL]

Received the following PM from someone called LLS.

" i read the past posts about u keep talking up valuetronics when people make negative comments u defend so stubbornly

fools and their money often parts ways

good luck hugging to your valuetronics shares"

Wonder why he is telling me that he is parting ways with his money....

[NTL]

As an interesting exercise, we can compare the valuations of valuetronics to another company I previously analysed, CDW Holdings. There are a lot of similarities:

1) Both are manufacturers with operations in HK/China
2) Valuations for both are "cheap". PE ratios are around 5
3) Management for both companies reward themselves with share options with exercise prices substantially below market price
4) Both companies have a major client which accounts for a very substantial portion of revenue.
5) Dividend yields for both are attractive: between 6-10% easily
6) Both have now "uncertainty" in their revenue streams stemming from the potential loss of part or all of the business with their one major client

It's a long tenuous exercise, but if you had the 10mil to put into just 1 company, which would you buy?

Sure. Will definitely love to do the comparison between the 2 companies. As I am not familiar with CDW, do give me a little more time.

[greengiraffe]

Could Felix Leong be back on the forum?

Speculation
GG

Received the following PM from someone called LLS.

" i read the past posts about u keep talking up valuetronics when people make negative comments u defend so stubbornly

fools and their money often parts ways

good luck hugging to your valuetronics shares"

Wonder why he is telling me that he is parting ways with his money....

[newborn1000]

I had been observing.........but so decided to contribute with

http://www.nextinsight.net/index.php/sto...-overblown