Strategy - Credibility issues persist for S-chips - by Ho Choon Seng CFA
With clouds of doubt enveloping the credibility of S-chips, especially those with net cash' positions, the managements of these companies continue to profess that cash on their balance sheets exists while giving multiple reasons for not returning the cash to investors. Disclosing the banks where the cash is purportedly kept and showing photocopies of bank statements are not enough to assuage investors' concerns.
We believe that the best proof that the cash exists is a return of capital to investors. Also, based on our checks with the managements of S-chips under coverage, only two companies have pledged shares. Despite cheap' valuations, investors are unlikely to jump into S-chips while insiders stay put, given continued credibility issues.
Full-report including
important disclosures: [ PDF ]
The latest report from CIMB on S-Shares in Singapore. S-shares in Singapore has been hit hard by this credibility issue and most of it (including my holdings in celestial) has be eroded till new time lows (lowest 0.08). To get investors' confidence in S-Shares, there's alot of work to do... as I always remember this, it takes 3 years to build up trust and reputation, but it takes 3 seconds to destroy it.
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