Posted by Sardin > 2023-06-22 22:53 | Report Abuse

There is one more thing he could do with the cash ---- privatise HLIND

Posted by Sardin > 2023-06-22 22:55 | Report Abuse

Hope he will offer a reasonable and fair price, such as RM 13 ~ 15.

Posted by observatory > 2023-06-23 00:59 | Report Abuse

What he deems as fair price might be unacceptable to the minorities.
Besides I can think of several reasons why privatization is not likely.
1. Check out the Hong Leong Capital privatization saga. At the age of 81, he probably has no appetie for another round.
2. HLI is not a core component in his empire. Not worth the time and effort
3. The minority interest is under RM1 billion. It is just 2% compare with his net worth estimated at over USD10 billion.
Of course, you may argue that he only needs to order his lieutenants to do the job. Besides, I have no knowledge of his family circumstances, which may or may not favour such an arrangement.

Posted by observatory > 2023-06-23 01:00 | Report Abuse

However, I feel the more likely outcomes, which are also the path of lesser resistance, are
A. Status quo, maybe with gradual increment in payout ratio depending on current business needs and performance.
B. An acquisition of an adjacent business.
C. Special dividend when he needs cash for other parts of his empire or other personal reasons.
In other words, HLI could serve as a kitty bank. A spare cash which itself is kept with HLB (including its money market funds), to be withdrawn when need arise. One don't expect the kitty bank to work hard to earn return.

Posted by observatory > 2023-06-23 01:01 | Report Abuse

For minority shareholders, outcomes A and B are not desirable. A will impose opportunity cost due to the low yielding cash.
B is not only risky, but as a small shareholder I believe I could better invest the cash by myself at other undervalued companies without the need to pay a premium.
As I've argued before, C is the best for minority shareholders. But we don't know when he will personally need the cash. Each year of waiting is one more year of opportunity cost incurred.
Therefore I see the recent disposal as a test. A test on whether they are willing to take care of minority interest though at least a token of special dividend.

Posted by TabulaRasa > 2023-06-23 16:39 | Report Abuse

The disposal of Hume Cemboard is a healthy development as it has been loss-making over the past few years (one can purchase the P&L from SSM). I for one do not expect a special dividend haha.

Posted by Sardin > 2023-06-23 22:33 | Report Abuse

TabulaRasa, you really dig in to study... purchase SSM somemore. I purchased that one for Guocera. :) Thanks for the sharing. I think Mr. Quek did not forget this counter lah. If he's just interested to keep the money in HLB he won't purchase the HLIND at this time, I think so. Maybe he wants to tell us "Hey, don't sell now. I'll reward you. Give me some time. Be patient." Haha

Posted by Sardin > 2023-06-23 22:36 | Report Abuse

Last time Tasek paid out a lot of dividend. Why is it not possible that one day or this year HLIND will pay out large sum of dividend? Just don't know when it will start. Maybe it will happen at a time when least people expect it to come.

Posted by Sardin > 2023-06-23 22:38 | Report Abuse

His birthday on 8th December

Posted by Sardin > 2023-06-23 22:42 | Report Abuse

But for cement factory... coal price has reduce tremendously while cement price has increased a lot. I think it will turnaround this year and make big profit and that's why it could be sold at RM 20 mil premium to its assets.

Posted by TabulaRasa > 2023-06-06 12:53 | Report Abuse

Hi Sardin, happy to contribute as I appreciate fellow forummers' sharing over the years. Hume Cemboard made revenue of RM127 mil, RM163 mil and RM180 mil in the 3 years to 2022, with losses of RM21 mil, profit of RM5 mil and losses of RM8 mil over the same period.

Posted by observatory > 2023-06-06 12:49 | Report Abuse

@TabulaRasa, appreciate your info.
Yes, I had to agree that likely no special dividend, or at least it will take a long time "pending identification of suitable investment opportunities and expansion plans" pointed out by Fabien.
Not that the 20 sen is a lot. I just want to see whether there is a shift in the Board's thinking.

Posted by observatory > 2023-07-06 12:52 | Report Abuse

@Sardin, Hume Cemboard Industries doesn't produce cement. Cement is their input to manufacture cellulose fibre cement boards. They must be paying higher cement price now.
Cement production is under Hume Industries, which enjoys a good run lately.
But I don't follow Hume Industries. I've spent time on Malayan Cement instead.

Posted by observatory > 2023-06-24 00:43 | Report Abuse

I overlooked two things in my earlier comments.
One is the amount of net cash. I overlooked the ~30% of MI held by Yamaha Motor Co. Based on Jun-2022 balance sheet, about half a billion of cash sat at subsidiaries, so ~RM150m or about 50 sen per share is to be deducted from my earlier calculation.
But my argument remains unchanged. HLI holds too much cash. If they can't invest wisely, better return to shareholders. Sooner the better.

Posted by observatory > 2023-06-24 00:46 | Report Abuse

I also overlooked the privatization of Tasek by Hong Leong Asia.
This is another example of controlling shareholders picking the best time to privatize at cheap. The price chart showed that Tasek share price was above RM16 during the infrastruture boom in 2015. After several years of share price decline, Hong Leong offered to takeover at RM5.5! After failing, they raised a mere 30 sen to RM5.8 and they succeeded.
Long term minority sharehodlers, faced with the threat of delisting, just threw in the towel.
Nothing against Hong Leong. But generally I won't expect charity from these controlling shareholders. I'll be thankful if they don't take advantage of me.

Posted by observatory > 2023-06-24 01:32 | Report Abuse

I'm a relatively new to HLI. I'm not familiar with its early history.
I found this article published in 2010 talking about HLI, Hume Cement, Hume Industries, the earlier round of delisting and Quek's private asset injection and so on.

https://theedgemalaysia.com/article/new-hli-looks-lot-former-hume

Is anyone familiar with that history? Could you share?

Posted by observatory > 2023-06-25 16:04 | Report Abuse

A summary and follow up on the previously mentioned The Edge article of 2010.
That article mentioned that in early 2010, Quek managed to privatize (the old) Hume Industries. The offer price was RM4.30, raised to RM4.50 later, which was below net asset value of RM5.17. The NTA included 37% of net cash at RM1.90.
In other words, if net cash excluded, Quek privatized the company with NTA of RM5.17 - RM1.90 = RM3.27 at mere RM4.50 - RM1.90 = RM2.60, or about 80% of book value.
By paying RM280m in cash, Quek took full control and privatized the old Hume Industries which had RM362m cash.

But in the same year, he sold several businesses under now private Hume Industries (Malaysia) Sdn Bhd to HLI. HLI acquired Quek's now private assets by raising funds through rights issue.
Among the businesses sold to HLI included Hume Cemboard Industries Sdn Bhd, where the disposal was announced recently.

HLI also subscribed to the ICPS of Hume Cement Sdn Bhd (which was parked under Hume Industries before the privatization). Importantly, by the 6th anniversary of the ICPS issue date, HLI would have owned 75% of Hume Cement which now planned to utilize its license to build the cement factory.
These corporate development was reported in page 12 of HLI's 2011 Annual Report.

Posted by observatory > 2023-06-25 16:08 | Report Abuse

So what happened to the cement factory which HLI invested in 2010?
Refer page 14-15 of HLI's 2014 Annual Report, HLI sold its interest to Narra in exchange for Narra's share issuance in 2013-14. Narra was renamed as Hume Industries Berhad, and the shares received by HLI was distributed to HLI shareholders.
The info can also be found in page 12 of Hume Industries Berhad 2015 Annual Report.

So the irony is, although the old Hume Industries owned the cement manufacturing license, their shareholders did not see the factory as the company was privatized in 2010.
Instead the license became Quek's private asset, whcih HLI invested in 2010 via ICPS, and in 2013 sold to Narra (the new Hume Industries today). It was HLI shareholders that got the distribution (although they indirectly funded the factory construction via HLI rights issue in 2010).

Afer the disposal of cement manufacturing interest, and now the disposal of Hume Cemboard Industries, HLI is almost a pure consumer product company (except Goucera, which I don't consider as consumer market).
Unless HLI return its cash to shareholders, it's unclear where the HLI ship will be heading next as it could easily tap into its cash pile for other acquisitions, on top of the RM400m investment in tile manufacturing announced early this year

Posted by Sardin > 2023-06-26 18:07 | Report Abuse

Would it be one day HLIND sell both Guocera and Hong Leong Yamaha so that the value of these two can be unlocked and distribute the cash to all the shareholders? Now it is actively liquidifying those subsidiaries that are not making profit.

Posted by observatory > 2023-06-26 23:51 | Report Abuse

In the foreseeable future, I’m confident that HLI’s Yamaha franchise will continue to generate solid free cashs to support dividends. The current DY at above 6% is respectable.
Beyond that, anything is possible. When it happens, I just hope everyone gets a fair deal.

Posted by observatory > 2023-06-27 10:08 | Report Abuse

Let's see if Kenanga's coverage could stimulate institutions' interest. Now I wonder whether the Dato's Jim Khor's buying could be related. Kenanga analyst could have made a company visit before they initiated coverage.

Posted by Blue Tulip > 2023-06-27 10:13 | Report Abuse

I have stopped buying stocks that recommended by Kenanga. Sapura Energy, Serba Dinamik and Pestech. They never do their due diligience before recommending.

Posted by lionel messi > 2023-06-27 12:00 | Report Abuse

This one is different Tulip. Don't put HLI in the same boat as those rubbish you mentioned.

Posted by ykloh > 2023-06-27 15:29 | Report Abuse

I Yamaha is not in E motorcycle, HLI will be badly impacted.

Posted by Fabien _the efficient capital allocator > 2023-06-27 22:47 | Report Abuse

Selling of Guocera would unlock substantial value to us shareholders

Posted by observatory > 2023-06-27 23:38 | Report Abuse

But it's investing RM400m in Guocera. To realise a good disposal value, the new factory has to be up and the business turned around, At least a few years from now.

Posted by observatory > 2023-06-28 00:18 | Report Abuse

Can Neo help Yamaha to maintain its market share in the future?
https://www.e-scooter.co/yamaha-neos/

Posted by lionel messi > 2023-06-28 11:02 | Report Abuse

E bikes are not popular. Not macho enough for rempits and ah bengs. Am sure the board and management are fully aware of the impact. Market leader ma.

Posted by observatory > 2023-06-28 12:43 | Report Abuse

E bikes are not popular now. But great forces are pushing the market towards electric.
Government may offer incentives/ restriction in line with its climate change pledge. Malaysia has pledged to reduce carbon intensity against GDP by 45% by 2030 as compared to 2005 level.
ESG pressure could also force Grab and Foodpanda to promote e-bike riders through differentiated rates. So are ESG funds if HLI were to attract institution money.

Gaining a foothole in this future market is important. The first electric cars from BYD in 2010 looked ugly too.
http://www.electric-vehiclenews.com/2010/05/byd-e6-electric-taxis-hit-roads-in.html
But over time, as technology improves, even Ferrari will go electric (expected in 2025).
Yamaha cannot afford to repeat the mistake of Japanese car companies. If Yamaha has a good range, HLI can formulate a roadmap and have a good story to tell investors. Investors are forward looking. The changes in future market composition gets reflected in today valuation.

Posted by Sardin > 2023-06-28 19:34 | Report Abuse

Yamaha already launched ebike in Vietnam. The same ebike can be launched in Malaysia anytime. Same design, just copy and paste here. Just waiting for the right time to replicate the same in Malaysia market. The right time will be when there is a regulation push from Malaysia Government. But I expect this will kick-in rather slowly because it may not be a popular policy and may affect the votes. Should there be an enforcement to use ebike, this will be a GREAT news to Yamaha because it will boost sales order.

Posted by observatory > 2023-06-28 22:46 | Report Abuse

The government will promote e-bikes not by restricting or penalizing traditional motorbike sales, but rather through subsidy, tariff exemption and other incentives for e-bikes. So it won't be a vote loser. However, it will take a while for the infrastructure and regulations to be in place, buying time for Yamaha.

Given Yamaha's dominance in Malaysian market, anything less than market leading position in e-bikes will not augur well. Vietnam offers good lesson.

Vietnam market leader Honda and Yamaha in were leapfrogged by multiple e-bike competitors. The current e-bike leader is VinFast under the Vingroup.

When the market shifted to electric, newcomers will disrupt existing order. I'm sure HLI is watching closely. But it is also dependent on Yamaha.

Posted by observatory > 2023-06-28 22:48 | Report Abuse

https://evbn.org/vietnam-electric-motorbike-market-makes-waves-1677801083/

Posted by lionel messi > 2023-06-30 07:42 | Report Abuse

Petrol is so cheap here. Motorbike will still enjoy subsidy even if targeted. Why need to go electric here?

Posted by observatory > 2023-06-30 23:35 | Report Abuse

For the majority of consumers, yes.
But for forward looking investors, their focus is on the first 5% market share. After crossing the 5% mark, e-bikes will dominate given the self sustaining momentum and economy of scale.

It took only a few years for the inferior digital cameras to displace film cameras. Kodak, despite invented digital cameras, was wiped out.
https://www.televisory.com/blogs/-/blogs/slump-in-digital-photography-are-smartphones-to-blame-

Closer to home, QL share price was boosted from RM2 to RM5 (split adjusted) between 2017 to 2020 by its tiny but fast growing Family Mart franchise. The business only crossed 10% of group revenue recently.

Maybe Hong Leong Yamaha will continue to dominate e-bike market. But it doesn't hurt if the management could articulate its strategy and roadmap to the investment community. Unless, of course, the Quek family doesn't care about share price.

Posted by Sardin > 2023-07-09 22:42 | Report Abuse

Next Q EPS will be 25 sen

Posted by lionel messi > 2023-07-14 08:41 | Report Abuse

Love your confident prediction Sardin. Quality stock. Just buy and keep. Set for life. Huat ah. Cheers.

Posted by stockraider > 2023-07-14 10:36 | Report Abuse

Go & join Quek family, kuda quek macai buy loh!

It is a great bargain this bluechip loh!

Posted by Sardin > 2023-07-14 12:13 | Report Abuse

I feel that eventually the dividend per share will increase to 60 sen per annum soon, or maybe more.

Posted by alexnada > 2023-07-14 15:37 | Report Abuse

Sardin? Why do you said that?
I want to learn more... usually your sharing very insightful.

Posted by Sardin > 2023-07-14 22:40 | Report Abuse

That's because:

i) HLIND is likely to make record FY profit
ii) overall environment for motorcycle and tiles are improving, where raw material costs are declining and become a lot more stable while demand remains solid, this spells good and widening profit margin

When business is matured, profit is improving and has become more predictable, that's when dividend get thickened.

If I were the billionaire who has lots of business, I will demand the matured business to continue create and submit cash so that I could allocate it on "more interesting business / investment". There will be too much restriction to how I could use the money if it remains in the public listed company compares to my private money. The most profitable business are usually not listed. And it is good to use private money to buy those business instead of going through HLIND where the profit will have to be shared with public shareholders.

Posted by Sardin > 2023-07-14 22:52 | Report Abuse

Also, if I have been already very old, and I have more than enough money, I just want to be happy. Making people whom I want to thank to be happy will then be my ultimate happiness and I certainly would not want to miss the opportunity of doing this great things while I am still alive and awake.

Posted by lionel messi > 2023-07-17 09:01 | Report Abuse

Haha Sardin, that's a bit too far fetched. Quek is too shrewd, astute and opportunistic to think about thanking and making people happy. The shark that he is will always be first and foremost does it make business sense to do something. Ultimate is to make money. Other things are secondary.

Posted by Sardin > 2023-07-17 10:39 | Report Abuse

It has been a boring 6-7% dividend yield stock. Set apart of your boring money to own this boring stock. But I think it might fetch extra excitement for current FY and the next to come. If dividend could increase to 60 sen or more then the price will be adjusted to RM 10.

Posted by Sardin > 2023-07-17 10:40 | Report Abuse

Patience is the key.

Posted by keluarpattern > 2023-07-17 10:41 | Report Abuse

Patience wait from ikan sardin till become ikan masin price still no up

Posted by Sardin > 2023-07-17 10:43 | Report Abuse

My advice is, don't put too much money in this stock because it is boring. You will have better patience if you have only invested a small fraction in this stock.

Posted by ykloh > 2023-07-17 11:58 | Report Abuse

How about a bonus issue to add some excitement to the share price, Like AeonCredit.

Posted by lionel messi > 2023-07-17 12:16 | Report Abuse

Thanks Sardin. Stock market game can broadly be grouped into 3 categories. Safe but boring, growth but can suddenly stop growing, goreng but can kena scammed. Ultimately this is an insider's game. Those not privy enough to first hand info can only buy and pray they won't kena burned. Therefore being prudent and conservative is key. I will stick to safe but boring anytime. Just auto cruise and happily ever after. Life is peaceful. Cheers.

Posted by keluarpattern > 2023-07-17 12:21 | Report Abuse

still got 1 is safe but down trend. see what happen to hapseng.

Posted by Sardin > 2023-07-17 14:50 | Report Abuse

Ya right, lionel messi. Peace of mind is precious. Must be careful, recently lots of scam salesman / promoter.