Kudos To The Serious Shareholder

Foreword from ShareInvestor

This article “Kudos To The Serious Shareholder” by Cai HaoXiang was first published in The Business Times on 01 May 2017 and is reproduced in this blog in its entirety.

Last week’s Pan-United AGM offers hope that quality questions can be posed at such meetings

An altercation over a long-winded but dogged investor at the Pan-United annual general meeting (AGM) last Wednesday turned into one of the more edifying meetings I’ve attended at the company in years.

Credit is due to shareholders for asking intelligent questions, and the board for their patient answers, such that everybody who attended the meeting left a little bit wiser.

If all AGMs turned out like this, there is hope yet for a nascent investor community here still finding its feet on making the most out of the event.

It all began when an investor – let’s call her Annoyed Auntie (AA) – confronted another investor – let’s call him Serious Shareholder (SS) – over the latter hogging the microphone for probably well over 10 minutes.

SS, the second investor to speak, was asking rambling but pertinent questions. He was essentially wondering how Pan-United can add value in its commoditised concrete and cement business. It took him many minutes to come to his point, and by that time, AA was feeling angsty.

AA was called by the long-serving chairman, former senior minister of state Ch’ng Jit Koon, to speak.

Instead of asking a question about the company’s financial statements, she wondered aloud if shareholders should be limited to the number of questions they can ask. She complained that SS was asking things irrelevant to the resolutions proposed.

AA might have been hungry. She said some people were already leaving, and asked if the meeting can move on.

At that point, about half an hour into the mid-afternoon meeting, it must be said that the discussion had not gotten far. But some applause for AA came from other probably hungry members of the audience.

SS took the mic again and retorted, to “ayes” from others in the crowd, that he was substantially invested in the company, and had spent a lot of time examining the financial statements. Other shareholders would want to hear what he has to say too.

He asked Mr Ch’ng if he could continue. Mr Ch’ng replied that other shareholders also need a chance to ask their questions, to which SS acceded.

And this is where things got interesting. Shareholder after shareholder began asking the most detailed questions about Pan-United’s growth prospects and cost-cutting activities.

SS, too, eventually came back with more concise questions over the company’s port business. Shareholders thus learnt, among other things:

  • That self-compacting concrete, which is more expensive, can still sell in emerging economies like Vietnam;
  • How Pan-United is now the top player in supplying ready mixed concrete to Ho Chi Minh City, where it has a fifth of market share, though there are concerns over whether the market is in a bubble. Selling prices for concrete there were even higher than Singapore’s;
  • That port utilisation rates have to be taken with a tinge of salt, due to complexities around products and ship types;
  • That the consumption of tissue paper and adult diapers was booming in China, and thus Pan-United’s substantial pulp and paper business at its ports there might continue to do well despite a trend away from the printed page.

A lady, concerned about the sustainability of Pan-United’s dividend payouts, even asked why the payout ratio was so high.

More than an hour and 10 minutes had passed at this point. Almost every question was educational to the layman.

Mr Ch’ng probably realised how shareholders were getting more than their dim sum’s worth. To his credit, when he spoke, he encouraged shareholders to ask away. When he finally said he could only take one more question,  nobody stepped up.

The AGM was in stark contrast to another I attended earlier in the morning, where some shareholders have not yet learnt that asking leading questions would get them nowhere.

 “The business will grow, right?”

“I hope so,” said the chairman, meekly.

“We can expect a good dividend next year, right?”

“I hope so,” came the reply, meek with a liberal sprinkle of cheekiness.

“Can the director being re-elected please stand up so I can take a look at him … OK, I will vote for you,” said another shareholder.

Shareholders can make or break AGMs. Apparently, at AGMs of a regional bank, a shareholder regularly sings to the chairman. Others try to pitch hot business deals. Don’t try these at home.

Much more can always be done to train Singapore’s aunties and uncles on how to ask short, pointed questions on business strategy, and hold management accountable for their disclosures.

Pan-United’s AGM last Wednesday offers some hope that quality questions can be posed at such meetings.

One day, we might even move beyond debating uncouth behaviour at the buffet line.

For that matter, there was no buffet at the Pan-United AGM, but dim sum considerately pre-sorted out by staff in individual plates.

This ensured every investor got a chance to eat instead of having to rough it out at the buffet scrum.

Investors had their fill that day in more ways than one.

So take a bow, SS and other meticulous shareholders like him. You deserve a round of applause.