C K Tang - U know how to do retail business?

ion across tang

Hi Management of C K Tang,

I saw the news today. You have reported ANOTHER $5.62 million loss for the year ended 31 Mar 2009. The loss was more than double the $2.19 million net loss a year ago.

The recent loss is due to the following:-

1. stock writeoff - $7.8 millions
2. marketing-related expenses up 8.2% to $21.9 millions
3. operating expenses up to $25.7 millions
4. depreciation expenses also up by 13% despite relaxing the useful life of some assets from 6 years to 10 years
5. Sales how? Only up a miserable 3% to $238 millions

The family - which owns 86.61 per cent of the company - has COINCIDENTALLY offered to buy the remaining shares it does not own at 83 cents per share through a delisting proposal a few weeks before the annoucement of this set of results.

Why do you want to buy over a money losing business year after year? Here are my speculative bits:-

• "Edgar, you are so stupid... it is not retail business that they are after. They are after the last piece of C K Tang building!!!!"
• "Ion, the building across C K Tang, must have aroused their interest."
• "Or is the buying back of shares, an expensive exercise to avoid listening to people like me and the public from querying their retail business management ability."

Why the need for USD$3 billions loss?

ion still in the making

It is reported in various papers today that "Temasek Holdings has cut its losses on Bank of America (BOA). The Singapore investment agency has sold its 3 per cent stake in the bank, resulting in a loss of about US$3 billion as it renews its focus back home and on the region."

Question - Why the need for Temasek to sell down and realised a loss of such a magnitude?

First thing first, you make decision on the merits of individual investment. When you are not short of funds, you don't have to sell before you buy again. You cannot justify the sale and subsequent loss of that magnitude by telling the world that you are "tweaking your portfolio and refocusing back to the region". This is pure crap.

Secondly, it is obvious that the information available to Temasek's management, ie. prior to its decision to systematicly selldown all its Bank of America's stake in Q1 2009, have painted a pessismistic picture of US economy and its banking sector in near term and thus prompted their decision to sell and not wait. They obviously do not believe that BOA's share price would not be any better to mitigate the loss. Recovery is obviously not in sight.

Didn't Temasek's management get any indication from its sources that the global equity markets would run from early May? Or is the current bull run in May an illusion? Or Temasek may be telling us something we don't know or we refuse to believe given the current bull run.

Has Temasek made another "boo boo" by selling too early? Or Temasek may have taken a wise, informed, preventive action to avoid greater future losses?

Only time will tell.

C K Tang - Deja Vu again?

Proposal
Tang brothers, now called themselves, Tang UnityThree LLP, are offering to buy all shares they do not own at 83cts. (They offered 65cts per share back in Dec 2006)

Background
This is the 3rd effort to privatise the company.
First time was Oct 2003 at the then offer price of 42cts was voted down.
Second time was in Dec 2006 when they offered 65cts.

Question
Still the same question - Is the current price a fair offer for a stake in a very very very prime real estate albeit in a competitive retail business and rapidly improving hotel business? Why the Tangs want to buy back the shares so badly? What does C K Tang actually own?

If the shareholders had accepted the offer in 2003, a shareholder would have missed on about 7.86% per annum rate of capital appreciation.

Read my previous posting on sum of parts could be worth a lot more.

P/S - I have no C K Tang shares as of today.