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21-03-2014, 03:11 PM
Dear all
I too have sent the letter earlier to the company and received the reply below. Further to that, I sent another email to the company. See below. You may want to also send a follow up email to the company to tell them reserving money for acquisition is not excuse not to do a share buyback.
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Dear Puay Kuan
Thank you for the reply. I noted that Sing Holdings share price has come down. I would like to ask for the remuneration of directors and key management over the same period, including the latest FY. In addition, I kindly request the Board Remuneration Committee to explain how the remuneration of key management are determined and what is the policy.
On your/ the Board stated reasons under point 1 to 4, I wish to highlight that the Board should view share buyback on the same basis any other land acquisition. This is because substantial value of Sing Holdings now is in the Robin Road site, as you are aware. Buying the company shares now will be no different from buying any other raw land, except that the Board is most familiar with the Robin Road project & the company's status and the company can buy at a substantial discount to NAV/ RNAV. In fact, on risk/ reward basis, from the Board's perspective, share buyback should be most attractive compare to other land acquisition. As such, the need for business expansion is no argument to reject a share buyback, from shareholders's perspective.
On that basis, the Board should also consider tapping on bank debt for share buyback, as that is what the company will do for land acquisition. Be that as it may, I will be grateful if you can share what is the company's cash position after full collection from The Laurel project.
Thank you.
I too have sent the letter earlier to the company and received the reply below. Further to that, I sent another email to the company. See below. You may want to also send a follow up email to the company to tell them reserving money for acquisition is not excuse not to do a share buyback.
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Dear Puay Kuan
Thank you for the reply. I noted that Sing Holdings share price has come down. I would like to ask for the remuneration of directors and key management over the same period, including the latest FY. In addition, I kindly request the Board Remuneration Committee to explain how the remuneration of key management are determined and what is the policy.
On your/ the Board stated reasons under point 1 to 4, I wish to highlight that the Board should view share buyback on the same basis any other land acquisition. This is because substantial value of Sing Holdings now is in the Robin Road site, as you are aware. Buying the company shares now will be no different from buying any other raw land, except that the Board is most familiar with the Robin Road project & the company's status and the company can buy at a substantial discount to NAV/ RNAV. In fact, on risk/ reward basis, from the Board's perspective, share buyback should be most attractive compare to other land acquisition. As such, the need for business expansion is no argument to reject a share buyback, from shareholders's perspective.
On that basis, the Board should also consider tapping on bank debt for share buyback, as that is what the company will do for land acquisition. Be that as it may, I will be grateful if you can share what is the company's cash position after full collection from The Laurel project.
Thank you.
(18-03-2014, 05:58 PM)ngcheeki Wrote: Reply for CFO of Sing Holdings:
We refer to your email on 6 March 2014.
The Company shares your concerns and appreciates your suggestions. Following requests received from a group of shareholders recently, the Board convened a meeting to discuss on the suggestions mentioned in the emails. We would like to assure you that it is the guiding principle of the Board that for every decision it makes, it should be in the best interests of the Company and all shareholders, and to ensure sustainability and continual success for the Company in the long run.
The Company’s share price has been moving upwards steadily for the past three years to a high of 52 cents before declining around July 2013 (please refer to the Company’s 3-year stock chart attached). The decline in the share price corresponds to the introduction of the Total Debt Servicing Ratio (“TDSR”) framework by The Monetary Authority of Singapore in end June 2013. The impact of the TDSR on the Singapore residential property market was harsh, which in turn resulted in the fall in share prices of companies with substantial exposure to this segment, of which the Company is one.
With regard to a share buyback scheme, the Board is of the view that the basic criteria is that a company must have cash in excess of its operational and expansion needs. A share buyback mandate, when exercised, may not address the under performance of the share price as seen in the case of some local property / construction companies where the effect on share price is minimal. In fact, share prices of some of these companies are lower than before the shares were bought back.
In the context of our Company:
1. The Company’s core business of property development and investment is capital intensive. For long-term sustainability, the Company has to continue to expand its business amidst the tough market condition now. Even with external financing, much equity is needed to fund any acquisition and subsequently, the development and construction of projects. As such, ready funds are required to embark on any acquisition opportunities.
2. All our projects are funded through a mix of internal cash and bank borrowings. With the prevailing challenging market conditions, in order to withstand any downturn in the property market or the macro-economies as a whole, it is critical that a healthy cash balance is maintained to provide assurance to the banks for their continuous support.
3. The Company is in a net current assets position. However, assets such as development and trading properties are relatively illiquid, especially in this challenging environment where sales are slow. Furthermore, the receivables due from The Laurels project will be required for payment of outstanding construction costs, income tax and for profit distribution to our 30% joint venture partner in the project.
4. The Company’s cash position as at 31 December 2013 stood at about S$27 million, some of which were project accounts’ money with restricted use.
In view of the funding requirement as explained above and without a large cash float, the Board is of the view that it would not be appropriate for our Company to deploy its financial resources to embark on a share buyback scheme or to distribute a sizeable dividend, as these may curtail its ability for business expansion and compromise its financial position.
Notwithstanding the current property market condition, the intrinsic value of our Company remains strong. With this fundamental value in place, the Company believes that market forces will determine the fair value of the Company when market sentiments improve.
Yours sincerely
Tay Puay Kuan
CFO
