Divestment of TMC

I just submitted my form to CDP  today to sell off my Thomson Medical Centre shares. Peter Lim is currently holding 85.42% of TMC and it’s no point that I hang on to mine as well. He is probably going to gain full control of TMC and de-list it thereafter.

It’s actually hard to let go a gem of a stock. TMC has always been a star in many investor’s portfolio due to its strong balance sheet, great cash flow and astute management. Looks like I have to hunt for other value companies now….

Advertisements

14 thoughts on “Divestment of TMC

  1. Sold my too. But I sold it in open market. It takes months if you sell via the form.

    Hav eyou earmarked any other value companies?

  2. Hi axt,

    I asked the CDP personnel and she said I will receive the money within 10 days. And a good thing when selling through the form is that I don’t need to pay commission.

    I’m still looking for value companies. How about you?

  3. Looking at Qualitas Medical Group. IMHO, this is better than Healthway Group in terms of their balance sheets.

    Hope to see your thought on this if you are interested.

    ALso looking at Viz Branz.

    Not vested on either yet.

  4. Hi axt,

    The ROE is too low for my liking for QMG. The cash flow for FY2009 is negative too. So, I will pass it.

    For Viz Branz, I looked at it before when comparing with Super. I like Super more due to better margins and cash flow.

  5. Hi financiallyfreenow,

    Im a fellow value investor. These are some of the many reasons i chose breadtalk:

    PROS
    1) Consistently increasing revenue, profits and operating cashflows for the past 7 years.

    2) Aggressive expansion in various areas including Singapore, Middle east, China and Hong Kong. Expansion includes franchising which is very low cost (and can be considered passive income). They are also handling Carls Junior in China as franchisee (proven business model).

    3) Conservative debt despite expansion (income enough to cover long-term debt, relatively low debt-equity ratio)

    4) Good ROE for quite a number of years

    5) Relatively diversified food business consisting of bakeries, foodcourts, restaurants (check breadtalk website).

    6) Strategic location of businesses. I’ve visited quite a few of them and location is good with constant, healthy inflow of customers (Think foodrepublic in vivocity, think all the bakeries at places where people will just grab a bite before going to work in the morning).

    7) It stock price is grossly below my expected intrinsic value.

    Cons
    1) Economic Moat is not strong since it is easily copied (note: i didn’t say it is weak). Breadtalk has first mover advantage in China and if you compare other bakeries, breadtalk’s definitely taste better. Also, they have other business which can act as back up if bakery business is not doing well.

    2) Recent drop in profit, cashflow most probably due to aggressive expansion (Note: cashflow and profit is still positive)

    3) Low/No dividend

    Breadtalk has been in business at least 10 years and yet the balance sheet is still doing well despite many saying their business is easily copied. I’m already vested in this stock and intend to put in more money in it. Please give me your comments.

  6. Hi MrValue,

    I have noticed all the pros you have mentioned myself. The only reason why I’m not vested is that I feel people don’t really care if they buy bread from Breadtalk or from a normal bakery shop. Thus, it doesn’t really have the pricing power. The food industry is a very competitive industry also. However, having said that, Breadtalk has got good cash flow and low debt, making this business a worthy one. These are purely my opinions and your take on the business is correct as well.

    If I’m not wrong, Breadtalk is thinking of going into Middle East as well. I remember reading about this some time back in ST. Pls correct me if I’m wrong.

  7. Hi financiallyfreenow,

    Yes you are right breadtalk is going into Middle East by way of franchise. What i feel about food courts and restaurants is that in some cases if the location is good, the business is good ie customers have no choice but to go there esp for the working class (perhaps due to proximity etc). So there is consistent business.

    Thanks for your advice!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s