Man Wah achieves interim net profit growth of 35.9% to HK$118.2m ÷ Net cash from operating activities remained strong at HK$47.4 million ÷ Growing PRC demand elevates ââ¬ÅCheersââ¬Â sales to record HK$167.8 million .....not too bad.
Management is buying their shares in the open market again... Going by this rate, the management will probably announce a privatisation once they hit 70%
Wong Man Li obviously thinks the share price is too cheap vs the fundamental. But another explanation could be that he doesn\'t want his \"partner\" Yu Tung Wan to get the RMB24.9m worth of Man Wah to-be-issued shares at too cheap a price. If the acquisition were to go through, the weighted average price would likely be at around $0.17. This is much lower than $0.232, $0.24, $0.272 and $0.272 for the weighted average price 1 day, 1 month, 3 months and 6 months respectively before the announcement on 26 Aug. The IFA (DMG) only advise whether the acquisition is on normal commercial terms, but not the financial merits of it. I agree with DMG that the deal has been structured properly in all aspects except one: The market meltdown in the last 2 months is a one-off abnormal event and basing the issue price in this period doesn\'t make sense to all existing shareholders. It is equivalent to selling Man Wah at 3x PE to buy Famous Bedding at 5.5x PE. The former has a more diversified market and distribution vs the latter\'s PRC only business. Since Mr Wong and his wife will abstain from voting, the minority shareholders will decide on the fate of this acquisition. I intend to vote against it unless the issue price is increased to the $0.30 level such that the PE is raised to the similar level of Famous Bedding.
Somebody should write a letter to Warren Buffett to invite him to look at Man Wah Holdings. He bought Nebraska Furniture before, so he should be familiar with this industry. :laugh: :laugh:
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