Bankruptcy..., page-10

Hi sunnyisland

I realise there are a range of things companies can do to get their share price closer to intrinsic value if they are trading at a discount to that value. I was wondering which of these things you think UOS should actually do.

As I see it:
Share buy backs are difficult due to the low liquidity of the shares. Shareholders might want the buy back to push up the price of the shares, but the company's target should be to buy back the shares at the lowest price possible.
Increasing dividends is difficult as UOS participates fully in the DRP for UOADEV which reduces the free cash flow from which to pay dividends.
Capital reductions are possible, and UOS did have a capital reduction of 8c/share in 2012. However, it's also very helpful for a developer to have a war chest handy for when an opportunity presents itself. Same goes for special dividends.

Personally, I'm not too concerned about the share price at the moment. Obviously a low price is better for accumulators and a high price better for sellers. It seems to me also that the price is a steep discount to value, and I think it's likely that that's due to a combination of low liquidity, lack of information, low dividend payout ratio (which I think is a good thing as their profits are being reinvested into an increasing stake in UOADEV), the fact that it's listed in Australia but all business is in Malaysia, and the weak real estate market in Malaysia right now due to recent introduction of property cooling measures.

If you need to be a seller, the discount is unfortunate. If you can hold and accumulate, I expect that there will eventually be a re-rating when some of these limiting factors drop away, or when earnings are simply too good to ignore.