Cortina Holdings

[weijian]

In the last 2 go-go years for Cortina/The Hour Glass, their GPMs are ~30-33%.

If the MSRP is 48k (after mark ups) but actual selling price is 70k, one is talking about close to 50% GPM.

So what is been published and what actually happened doesn't seem to tally. But will there be coveted pieces of watches where they are able to sell at GPM of 50% (or 100% mark up from cost)? I bet there are! But these are probably more the exceptions than the norm, because the numbers in financial statement already says that it doesn't happen on average.

It will be convenient to remember that publishers love to publish the exceptions to grab headlines (and it has pretty sure did).

[brattzz]

MSRP = 48K, market selling price = 70K.... no wonder there is no stock for walk-in customers at all.. end up customer has to "buy" their way into the sales representatives

Luxury market is something that i will never understand.... :O :O :O

[weijian]

The recent published AGM MoM showed that the Lim family had been thinking about "capital allocation" and so here they are, coming up with an equal access offer (EAO) for every shareholder to tender up to 8% of shares, and at a price ~10% higher than market price before the announcement was made.

The Lim family (~47%), Dr Henry Tay (~13%) and long time executive director Victor Yu (~10%) owns a combined 70% stake in the company and they will probably not sell. So this means that the remaining 30% holdings have a higher tender limit of 8%*(70/30)~19% (assuming they are distributed equally).

OFF-MARKET EQUAL ACCESS OFFER FOR SHARES

The offer price for each Share shall be S$4.15 in cash. Each Shareholder is entitled to sell up to 8% of the total number of Shares held by him

https://links.sgx.com/FileOpen/CHLOffMkt...eID=903184

[weijian]

The recent published AGM MoM showed that the Lim family had been thinking about "capital allocation" and so here they are, coming up with an equal access offer (EAO) for every shareholder to tender up to 8% of shares, and at a price ~10% higher than market price before the announcement was made.
The Lim family (~47%), Dr Henry Tay (~13%) and long time executive director Victor Yu (~10%) owns a combined 70% stake in the company and they will probably not sell. So this means that the remaining 30% holdings have a higher tender limit of 8%*(70/30)~19% (assuming they are distributed equally).

OFF-MARKET EQUAL ACCESS OFFER FOR SHARES

The offer price for each Share shall be S$4.15 in cash. Each Shareholder is entitled to sell up to 8% of the total number of Shares held by him
https://links.sgx.com/FileOpen/CHLOffMkt...eID=903184

The new %shareholdings after the equal access offer (EAO) to tender up to 8% of shares is out.

As expected, Lim family (~47%) and Dr Henry Tay (~13%) did not tender any. As a result, their % holdings have increased to ~51% and ~14% respectively.

However, long time executive director Victor Yu (~10%) tendered his shares and had ~26% of his shares bought back by this EAO exercise. This amt of purchased shares is much higher than the minimum amount the EAO would have purchased assuming only Lim family/Dr Henry Tay didn't sell. So plenty of OPMIs didn't sell much too and back of envelope calculation indicates only ~50% of OPMIs' shares were tendered.

Lim family: https://links.sgx.com/FileOpen/_Subtabti...eID=906281

Dr Henry Tay: https://links.sgx.com/FileOpen/_Form%203...eID=906283

Victor Yu: https://links.sgx.com/FileOpen/_Yu%20Chu...eID=906275

[Choon]

Wonder why more thinly-trade cash-rich companies on the SGX do not do this?

Its a fast way to buy back a significant number of shares and may well work out to a a lower purchase price than doing share buybacks over a long period of time.

[weijian]

Wonder why more thinly-trade cash-rich companies on the SGX do not do this?

Its a fast way to buy back a significant number of shares and may well work out to a a lower purchase price than doing share buybacks over a long period of time.

Hi Choon,

In general, I have noticed that companies who do SBB, do not do EAO, and it is probably related to what you have mentioned, ie. low public liquidity. But if we think from the view point of the decision makers, EAO is definitely a faster way for cash-rich companies to get "less cash rich" as well, isn't it?  From a decision maker's perspective, maybe it is never about buying more shares cheaply, but about control/maintenance of your cash-rich BS. For example, if you already own 51%, it doesn't change the fact that you still control the company whether you have 55% or 80%.

With the updated %shareholdings, it is legit to suspect that the EAO's main purpose was to allow their long time partner Victor Yu to monetize a portion of his stake. Since the Lims are definitely not selling, Victor Yu will be able to at least monetize a portion that is double the 8% cap. If my suspect is true, Cortina's EAO exercise is similar to the one carried out by Jumbo Group in 1Q2024 in terms of intent. Finally, the Lims now have majority control (>50%) and will be immune to any sort of opportunistic dealings between Dr Henry Tay and Victor Yu.

Jumbo Group' EAO in 1Q2024: https://www.valuebuddies.com/reputation.php?uid=662