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QuestionsCategory: Valuation QuadrantCash cow – Sysma
Willie Koh asked 5 years ago

hi Victor/Rusmin,
Came across this company with cash at $54mil and market cap at $39mil. Company business is the property market specializing in GCB or luxury housing. With the stock price $0.154 and plenty of cash, is there an arbitrage situation here? Only risk I can see is their declining order books and also the way the management handling the cash pile. However, the management has a huge stake in the company abt 66% which will only benefit them if they decided to ramp up the dividend. Thanks. 

1 Answers
Victor Chng answered 5 years ago

Hi Willie,
From what I heard from you, This company is a deep value type instead of value growth investing. The important thing is how the management is handling the cash pile. If the company have cash pile but the management is not playing back anyone of them to shareholder or paying themselves a high salary, than this company cash pile is useless because the money is never yours. Do note that such asset type of company may take a long time to realise and there is opportunity cost to it.

Willie Koh replied 5 years ago

Understood. Thanks