The Dilutive Elephant in the room...

So can we talk about the Dilutive Elephant in the room?

I have went through the past annual reports page by page, up to this year. I am bothered that no one has been specific about the results of the two Singapore acquisitions. HHC alone created a dilution of 20%.

People HAVE mentioned the issue of dilution, but no one has been specific in how its been done on these forums..

Focusing on HHC. Because HHC's profits have far outstripped the targets laid by Ci1, Ci1 had to make up for this in shares, in this case 200m shares, or 20% of the total shares on offer. Thats just HHC, someone can correct me, but with the total shares approved it would be closer to 300-350m shares?

My views are two fold. Either:

1. The profit targets were purposely set too low, so that the insider would receive a large block of shares.
2. Ci1 have made a huge error in their analysis of the acquisition.

It can only be one of the two. Its a major issue because Ci1 has only begun their expansion and acquisitions. Should we value Ci1 as if they had 1.5b shares? 2b shares?

Some would say its justified if the growth is large enough, but I disagree. If future growth will be paid for via cash and shares, might Ci1 make the same misjudgment's on the business they will acquire again? Creating another instant 20% dilution to the current holders?

This is not an issue for the insiders, its an issue for the smaller shareholders of this business.

After doing deeper reading, and comparing Ci1 to the peer group, I am questioning Ci1 as a long term investment.

Disclaimer. I am a holder. I got in what I valued a fair price because I could justify the growth in the future (3c-3.2c).

I am not down ramping here. Just asking hard questions. And they are hard to ask after you have a position. I had these concerns at around 3c and 2.8c before it began going lower. The lowering price wont scare me off, but various aspects of how Ci1 move forward in the future will.

I do love the position Ci1 is in. I can see the value for sure, and I can even be confident in their future. In saying that, my position will be eroded away if Ci1 continues these practices in the future. Mistakes that erode the value of my position by 20% at a time is not great.

Looking forward to some replies that would counter my thoughts, and justify 20% dilutions every other time Ci1 acquires another business. Please dont reply about how good the future is, I want meat and vege here. Just saying how great future growth will be is not a counter. At worst I want examples of other growing businesses that outstripped extreme dilution, perhaps being justified 4 or 6 years after such growth.