You are correct they trade below NTA, way below. After a good...

You are correct they trade below NTA, way below. After a good Q1, at 50c, I would say less than 60% of NTA.

I would personally prefer they cut the dividend altogether, but management are aware of how harshly the Australian market treats foreign domiciled companies if they don't pay a reliable dividend. If you think they are undervalued now, imagine if they eliminated the dividend.

Given this, they maintain a modest dividend policy (paying out about 30% of earnings), but offer reinvestment as the management want to leave their capital working with the business. Given the more than 95% take-up in the DRP, most holders see merit in this decision & follow suit. It is inefficient capital allocation, but a necessary quirk of being listed in dividend obsessed Australia.

Last Friday before I let Kuala Lumpur, I caught up with CS Kong at the Capri for breakfast & we discussed the low stock price and the merits of the dividend etc. In discussing the reasons for the illiquidity, I mentioned that Board and senior management owned about 70%, there should be enough free float (around 30%) that at the right price it could be quite liquid. He mentioned that there were still people on the register who had bought in at IPO who had used the dividend stream to put their children through University. It is unsurprising that such people are reluctant to part with their stock. And if their need for cashflow has diminished, that they probably now participate in the DRP. In truth, if everyone participates, no-one is disadvantaged.

I will do a post on this on my blog in a few weeks, I am awaiting some more material to hone the numbers more accurately, but the value creation by UOS has been breathtaking since inception, the IRR has approached 25% annually, with every $10k invested at IPO worth around $6m only 29 years later. Management that have delivered such an operational performance are allowed to have slightly inefficient capital allocation I suppose - Eternalgrowth