| Date of Hersing share buyback | Purchase price/share ($) | No. of shares bought | Total value ($) |
| 29-09-2008 | 0.235 | 192,000 | 45,000 |
| 26-09-2008 (end of week 3) | 0.235 | 100,000 | 23,000 |
| 25-09-2008 | 0.24 | 120,000 | 28,000 |
| 24-09-2008 | 0.235 | 223,000 | 52,000 |
| 23-09-2008 | 0.235 | 600,000 | 141,000 |
| 22-09-2008 | 0.23882 | 254,000 | 60,000 |
| 19-09-2008 (end of week 2) | 0.233 | 250,000 | 58,000 |
| 18-09-2008 | 0.22120 | 540,000 | 119,000 |
| 17-09-2008 | 0.22447 | 190,000 | 42,000 |
| 15-09-2008 | 0.22 | 200,000 | 44,000 |
| 10-09-2008 (end of week 1) | 0.20917 | 60,000 | 12,000 |
| 09-09-2008 | 0.20091 | 491,000 | 98,000 |
| 08-09-2008 (maiden purchase) | 0.21 | 40,000 | 8,000 |
HERSING CORPORATION is better known as the master franchise holder of ERA, the real estate brand.
It is also the pioneer in Singapore for what it calls StorHub Self Storage: In any of its five buildings in Singapore, you can rent a room as tiny as 12 sq ft and as large as 200 sq ft for a monthly fee, and store whatever you want.
Hersing’s stock is illiquid. In buying back its shares, Hersing has been happy to place a big order regularly and wait for a seller to throw stock its way.
Often, a seller would materialise and the transaction would be the only one for the day. The table above shows the company’s share buyback since Sept 8, which was when it made its maiden purchase after obtaining a share buy-back mandate.
The support for the stock is of course gratifying to shareholders. What is also interesting is the company's recent announcement of its plan to sell its four properties in Toa Payoh and Changi to an asset company in which Hersing will hold 20% while the fund, 80%.
The book value of these four assets is around $30 million.
There is expected to be a handsome profit and part of the sale proceeds could be paid to shareholders as dividends.
Hersing has a track record of paying higher dividends following exceptional gains.
In FY 07, it paid 3 cents a share as special dividend (this was before a 1-for-1 bonus issue) after receiving $26.6 million from Western Union, for the share conversion of its 49% interest in Western Union Group Network.
On top of that, the interim and final dividends were 1 cent a share each.
After the Feb’ 08 announcement of the hefty special dividend and final dividend, Harry Chua, the company’s majority shareholder, chairman and CEO, went on a buying spree.
And why not, when the yield was around 10% (ie, 4 cents divided by purchase price of around 40 cents, both figures being pre-bonus issue at the rate of 1 bonus share for 1 existing share.
| Date of change of interest of Harry Chua | Purchase price/share ($)* | No. of shares bought* | Total value ($) |
| 02-04-2008 | 0.62055 | 1,811,000 | 638,000 |
| 31-03-2008 | 0.53 | 1,053,000 | 558,000 |
| 27-03-2008 | 0.4476 | 1,736,000 | 777,000 |
| 25-03-2008 | 0.39975 | 2,210,000 | 883,000 |
| 14-03-2008 | 0.40086 | 840,000 | 336,000 |
| 12-03-2008 | 0.40273 | 644,000 | 257,000 |
| 10-03-2008 | 0.38898 | 295,000 | 115,000 |
| 06-03-2008 | 0.47433 | 936,000 | 443,000 |
| 04-03-2008 | 0.47667 | 185,000 | 881,000 |
| 29-02-2008 | 0.47954 | 1,619,000 | 776,000 |
| 27-02-2008 | 0.51579 | 1,557,000 | 803,000 |
*Before 1-for-1 bonus issue
Going forward, aside from a possible dividend payout to shareholders, the sale proceeds from Hersing’s four buildings will also be used to acquire assets in Asia-Pacific to expand sharply its self-storage business.
Hersing, however, faces a possible sharp slowdown in the property market in Singapore. The effect was already evident in Q2 this year, when its net profit plunged 76% to $1.57 million almost entirely because of the slowdown.
Its net asset value is 10.8 cents a share, or about half of the recent stock price.
If you assume a handsome dividend payout will be forthcoming from Hersing, you also know that in today’s market, there are bargains galore – including stocks with double-digit dividend yields (assuming past levels of dividends are maintained going forward).
Possibly from Hersing’s point of view, a buyback leading to the purchased shares being kept as treasury shares makes better sense for it than parking its cash in the bank earning far lower returns.
SIAS Research analyst Alan Lok says that Hersing has been proven right in entering the self-storage business as well as money remittance business, “especially when most people laughed at their business model during the initial stage.”
He adds: “On the surface, it seems to be a mix of business from many areas and there is no synergy at all. However, if you look deeper, just ask any man on the street about the "Storehub", "their money remittance brand name", "ERA" – all these will sound familiar - that is Hersing's strength. Their niche lies in marketing a brand name.”