As expected, no divident.

Basic parameters of CH as follows:

Cash - SGD36m - 3.8c per share

Net Current Asset (NCA) - SGD56m - 6.0c ps

NAV - 37.5c

Today's closing - 25.5c......this is 40% discount to NAV backed by strong balance sheet as shown in NCA.

CH is developing former ABC site in Perth.....prime location....into commercial/retail and residential development. When phase 1 completed (prob in FY2012 or 2013), it should give profit a boost.

Other business include electronic contract mfr (PCI) and offshore oilfield support business (CHO). These are expected to remain stable.

With no SBB to support price, can expect share price to drop further...i.e. more discount to NAV.....=> opportunity....only for long holders...don't expect to make $$$ on quick flip.

RISKS - If share price get too cheap, Pehs may decide to move in to take it private and knowing the not so good relationship with minorities, he will probably not give minoities a fair deal. 

SCOMI marine performance and outlook questionable.....controlled by former malaysian PM son in law...so no more political leverage.

My assessment is there is <50% chance they will declare interim div....cos, if they do this, the Pehs will be seen as giving in to minorities (after losing the SBB mandate) and lose face.

Despite his smiling face (tiger smile), one can see old man Peh was pretty sore about the SBB issue. I noticed the younger Peh storming out of the meeting room right after the EGM was adjourned........didn't even have the courtesy to hang around to spend time chatting with minorities.....as is the usual practice in other AGM/EGM I attended.

I expect the share price to fall further if interim div is not declared........then, there may be opportunities......but no need to hurry..

Caveat emptor.

The USD 17m was spent so no longer part of CHH assets. However, when the repurchased shares were cancelled, the issued shares were reduced and this would have an impact on NAV....cos total net asset is divided by less shares.

From my estimate, Co. SBB was approx 71million shares......this would have impacted NAV by approx 7%....perhaps 1.5US cts.?

Sorry, I cannot advise whether you should hold or sell.

As I said, without the SBB mandate, Co. is unable to support falling share price.

During the AGM, Mano asked the board to consider declaring an interim div for 1Q2011. We shall see.

What can minorities do?...Well,  AGMs is certainly one way minorities can voice their concerns. But alas, most minorities cannot be bothered and some of those who do attend, do so for the wrong reasons.....there were several who couldn't wait and left early as soon as they got whiff of the food on the buffet table.

Hi Shplayer, thanks for the info. I am quite puzzling.

Please refer to this link, http://www.chuanhup.com.sg/investor.html the article states,"Net asset value per share increased to USD 25.06 cents from USD 21.78 cents. This is mainly contributed by higher profit and increase in mark to market fair valuation of certain available-for-sale investments held by the group."

In your post you say, "... they spent USD17+m  (1.8 us cents per share) to do SBB". So, is this "1.8 us cents per share" forms part of the "USD 25.06"? If so, wouldn't this (1.8 us cents out of 3.28 us cents?) be the main contribution to the increased in the asset value per share? 

EGM resolution to extend share buyback (SBB) mandate to the board.

Co. FY2010 was profitable….they spent USD17+m  (1.8 us cents per share) to do SBB but did not pay div. Board said there is a resolution in the past that Co. profits can be used for SBB and div payout. But after spending on SBB, only about S$2.4m was left for div. Since it was ‘too insignificant’, the board decided not to pay div this year.

Minorities were understandably very upset cos they feel that the SBB was done to strengthen the Pehs grip on the Co. With SBB (and cancellation of shares), the Pehs now control 50.2% of the Co. Board denies that this was not the intention….they claim the SBB (bought below NTA) was to enhance shareholders value and NTA.

Mano Sabnani, who was present as proxy, argued that, despite the massive SBB, Co share fell from 35c to 25c. Using SBB to ‘enhance’ shareholders value is a mere 'financial engineering' tool that does not work….as proven in CH case.. What investors are looking for in a Co. is how it focus on its core business, how manages its business and how it plans to grow its business, transparency to the investing public….which is sorely lacking in Chuan Hup (note – CEO is the younger Peh).  

In my personnal assessment, I don’t think the current CEO has the ‘helicopter view’ to make quantum growth for the Co. In good (economic) times, the Co. will be profitable and grow organically……but when the tide turns, will he have the astuteness to keep the Co out of trouble?…if  the performance of the Co in recent financial crises is anything to go by, then the answer to this question is clear……vis a vis FY2009.

When the resolution to extend SBB mandate was put to the vote (by show of hands), ALL the minorities voted against it. Snr Peh was a pretty sore loser and flexed his majority muscle by asking for another vote by poll…..which, with his 50.2%, is sure to win. The minorities, led by Mano, told the Chmn that if it did go for a revote by poll, all the minorities will stage a walkout. After much debate, Chmn relented (despite the adverse sentiments from the minorities, he was under a lot of pressure from the Pehs)  to recognise the vote by show of hands. Thus, the resolution was not passed.

Now that there is no more SBB mandate, Co. cannot support CH falling price. The lower it goes, the more discount to NAV…..which may present opportunities. CH’s subs - property development (Finbar Australia), CHO and PCI are currently doing well. SCOMI Marine is not so good….but its not equity accounted.

Of course, the fall in price may also present opportunities for the Pehs to mop up more shares (at a discount) and perhaps eventually take it private…..the difference this time is, they will have to use their own $$$$....and not shareholders $$$$.

DYODD.