John Yeo made an interesting comment the other day on why Xinghe gives away free warrants or bonus shares when the same can be achieved through a staggered dividend payout.

Giving warrants or doing rights issue will not deplete the company's cash reserve as some would wrongly contend. But, I'd be concerned for minority shareholders' rights.

Investors should raise the issue at AGM against any move to dilute the price of the existing securities.

Rather investors must propose that the shareholders vote at the AGM to pass a motion for a permanent share buyback program in order to protect its share price against falling below its net tangible asset per share of 20.4 sen per share in FYE 2014. Such a share buyback program can be funded from existing cash reserve and rights issue for convertible loan stocks, if need be. This will be boost investor confidence and defend the shareholders' stock value against unfair pricing in the market - which happens for one reason and one reason only the market continues to irrationally blackball everything Chinese.

In fact, an aggressive share buyback program will ensure Xinghe’s stock will rightly trade at a fair price of 5x its net tangible assets per share.

                                                                                                                                         Ezra, 21 June 2015