Posted by: donmihaihai | November 28, 2009

The fight is on!

Daylight Robbery! That was my immediate reaction when I saw the announcement from Full Apex that the management is seeking delisting of Full Apex at the price of $0.18. No, I am not going to sell at $0.18. But what about the other? This is a hard call, or even guess. Since my holding is almost non-existent, I try to see if the 2nd largest shareholder and independent director Mr Chng Hee Kok are going side on the management or sell. My initial assessment was no. I seriously doubt Mr Chng will agree and sell his shares since all his shares were purchased way above the offer price and anyone who is not drunk, with some understanding of business and valuation will come with the same conclusion of not selling. The spotlight fall on Pope Asset management who hold 5.56% of Full Apex at the time of announcement.

Checking back the movement of Full Apex Share price and the date where Pope Asset Management holding crossed 5%, their average cost must be over $0.18. So this provides the 1st dis-incentive for them to sell. Next From their website, it shows that Pope Asset Management is a fund using value approach. And from their two investment in “S – Chip”(it’s happened that I followed these two companies), I easily concluded that they buy stock at dirt cheap level but it is the selling that I concerned. So when the filling on 23/11/09 appeared, I know the fight is on because they increased their holdings from 5.56% to 6.39% at around delisting price.

A side notes on Pope Asset Management other investment. That stock is United Food. One of my ex-holdings, I had made a loss on this one and up to today, it is still my biggest losses when I cut and sell everything away at over twenty-something cents few years back. United Food continues to be badly managed and left with a commodity business of crushing soya bean. But the beauty of buying below $0.10 is that it is below 0.3X of the Book Value. If the share price doubled and trade at say $0.20, investor will get 100% return while it is still trading at around 0.6X Book Value. As long as the management doesn’t make big mistake, destroying huge amount of value at one go, the chances of double or triple the share price is actually very good. What more, this is in a commodity business where profit will swing and with years of public available information show that despite being badly managed, it doesn’t use leverage and their financial statement is actually being drawn up prudently. Ex-shareholders selling at this level (or to Pope Asset Management) ignored one of the most important aspect of investing — “price”.

Full Apex is not United Food in a way that while its profitability has been decline since listed, shareholder value actually being created and of its three businesses, the biggest two operate in industry where competition is low. The businesses of selling PET bottle and PET chip are like leeches, more so for the former. Once a PET bottle plant installed in or beside their customer facilities, competitor will find it hard to supply to the same facilities- think about low price per unit and the cost of transportation. It is also leeches-like in the sense that this business suck up the capital intensive part of the whole soft drink value-chain or rather the part where the two giant soft drink sellers doesn’t want to appear in the balance. Over a long period of time, this businesses of manufacturing PET chip and bottle must be reasonable profitable because giant soft drink sellers are not going to be suck on by walking dead.

The profitability of Full Apex since listed strongly supports my assumption. If Full Apex operate in a competitive environment and with soft drink giants as their end customers, the rise of crude oil from 20s to 150 then slumped to 40s to the current 75 to 80 bucks will basically crashed this company and the double of NBV since listed will not happened. And it is achieved through the old fashion way — earned it. After spending hundred of million of RMB building PET plants and PET chip plant, Full Apex has been doing what is most sensible and with the support of their cashflow by reducing debts. And it is not a wild guess that going forward, debts will be easily repay so either cash goes up or dividend increase or another huge Capex is coming soon.

For a company like Full Apex, the minimum fair value should be at least at BV and how much higher depend on how well the company is being managed. So with this alone, exit price of $0.18 is just 0.6X of what I think is the minimum. And at this current moment, after spending massive amount of capital expenditure for the last few years, their plants should be operating at best 60% utilisation. Utilisation will increase when China keep growing which means that earnings will keep growing even without expansion as long as China keep growing.

That mean I think Full Apex NBV is realisable in the sense money will pour out from operation. How much will flow into shareholder hand is another issue but it is not like “some company” where shareholders demand delisting at NBV or using revised NBV by comparing other property in the area. The biggest flaw in using NBV in that case is that operating cashflow doesn’t support it so the only way to realise its “value” is through addition infusion of capital to transform the property or sell it. Whatever it is, it is a losing battle if the assumption is wrong in the first place.

With Pope Asset Management clearly understand theirs business and I believe many other minority investors like me understood it too, the offeror will not get > 90% of the shares( I hope).


  1. i sympathise with your predicament as i was also forced to sell a delisted share way below book value due to majority shareholder owning more than 90%.

    it all depends on whether the majority shareholder is “kind” enough to offer you a reasonable exit. however, we won’t know their “kindness” quotient until the day comes.

  2. Pope Asset Management had blocked Kingboard Copper Foil Holdings delisting plan recently, and I suspect they will do it again on Full Apex.

    Having said that, Full Apex is doing this voluntary delisting proposal and not via a general offer. Therefore, the delisting resolution only need 75% to go through, not 90% as you had stated.

    But wait, the delisting resolution also needed 10% or more not to vote against it to go through. Which means, they can get 75% but as long as 10% or more opposed, the delisting plan will fail.

    I will vote against the delisting resolution. πŸ˜€

  3. Let see if I got it right.

    They can easily get 75% for the delisting resolution. But as long as they can’t get >90% of the over acceptance, Full Apex will stay listed.

    I am looking at the 90%. 75% is too easy for them.

    Kingboard Copper Foil Holdings…. interesting.

  4. Hi donmihaihai,

    Not really correct I must say. You see, they can get less than 90% (but more than 75%) but the delisting resolution can still go through if less than 10% opposed.

    Why they get less than 90% but still less than 10% opposed? Because some shareholders couldn’t bothered to attend or appoint proxy for the SGM.

    So, in order to defeat the resolution, minorities must get together to get that 10%.

  5. Hi ghchua,

    I understand this.

    But I have another question. So let say the resolution is passed. Will it still be continue listed if acceptance rate is below 90%, i.e more than 10% do not accept the offer?

  6. Nope. If the resolution is passed, the company will be delisted from SGX.

  7. Thank you… πŸ™‚

  8. Hi, What is your stance of the delisting of Full Apex? I really do not want them to go through the delisting as I think this is a daylight robbery as well.

  9. I will vote no.

  10. Hi,

    It was a close one. I am glad that it didn’t go through!

  11. From Chairman comments, the results is almost decided even before the start of meeting. Close to 10% already voted “no”. That mean beside Pope which hold about 7%, there are other significant investor(s) which hold close to 3%.

    The fate is decided by peoples who don’t even need to show their faces rather than circuit clowns in the meeting.

  12. I am surprised the vote was that close. Are there other institutional holders of the stock besides Pope?

  13. I don’t know

  14. I sent in my proxy and voted no. I thought it will be very close, and Pope with 7% obviously couldn’t do it alone.

    I think it is really the minorities who have to be congratulated for blocking this one.

  15. Hmmm…. question.

    The proxy must be around to vote or not?

    • No need to be around. I just leave everything blank, which means the chairman of the meeting will be my proxy.

  16. Hopefully we all did the right thing and the stock will do well going forward. Interesting posts and analysis. Bill @ Pope Asset.

  17. ghchua,

    That was a stupid question from me.. never read. sorry.

  18. Hi Bill,

    Thank you very much and what a surprise!

    Yes hopefully we(all shareholders that voted against) did the right thing. While winning the delisting resolution by itself does protect downside, we have not gain anything yet. But there are much to gain if Full Apex can do reasonablely well going forward.

    The 2 main reasons that shareholders voted against the delisting resolution are selling below NAV and dividends income(little but so many are still looking and pushing for one). Cutting dividend payout to nil is another plot to seek for delisting again 6 months later? Hopefully this is not the case.


  19. Dear all,

    Pope Asset owns over 10% of the shares in Kingboard Copper Foil. We helped vote down the privatization attempt by management at $.21/share SGD and have been active in trying to hold management accountable as to the transfer price they are using between Kingboard Copper and the parent company (Kingboard Laminates). We would like to get in touch with other holders of the stock and would ask that you send me an e-mail if you would consider working with us to try to help protect our mutual shareholder rights.


    Pope Asset Management

    • Hi I am shareholder for Kingboard. Thanks for your efforts to push hard n Kingboard management. Keep it up.

  20. Hi, anyone has any comment on what is the latest Full Apex SGM about? Are they trying to buy back more shares so that they have more rights on the company’s futures?

  21. I am not better informed than you and your guess is as good as mine.

    I am not concern at all and hope that they buyback more shares. What I concern about is the restructuring and selling of business.

    • Thanks for yours. I am keeping my fingers crossed.

  22. Dear all,

    This is Angel Liu with Pope Asset Management, LLC. If you are still a Full Apex’s investor, will you please send me an email at


    • Full Apex management has veto Pope asset request for a SGM, definitely, they are trying to siphon as much asset out of the listing company as possible by selling their asset cheaply.
      We as investors need to ask for the reason for the cheap sale and if necessary, block these kind of deals in the future and punish/vote out those directors who are not working for the interest of shareholders and the company in general.

  23. Hello all, some advise is needed. Do I need to be present in the GuangZhou AGM/SGM in order to vote or I can also vote at the teleconference meeting in Singapore. Thanks!!

  24. My understanding is no you can’t vote thru teleconference meeting.

    • Thanks!

  25. Hi,

    Anyone is aware of this?

    Petition seeks share buyout from Full Apex at fair value :

Leave a Reply

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

You are commenting using your 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 )

Connecting to %s


%d bloggers like this: