(Nov 11): The Thakral family started out as traders and made additional wealth from real estate. They are ready to apply the same trading mindset to owning properties: When the timing is right and the opportunity is there, they are happy to book a gain. In August 2017, Thakral Corp sold a warehouse in Kowloon, Hong Kong that was previously used for its trading and distribution business.

However, as the company changed its product mix from bulky household goods such as TVs to smaller-sized beauty products such as the ReFa handheld face roller, there was no need for that much space, and the property was sold for $74 million, which allowed the company to book a gain of more than $33 million. The company was able to increase its net tangible assets per share from 75 cents to $1.02. “We got lucky,” says Thakral Corp CEO Inderbethal Singh Thakral.

The proceeds from the sale were set aside to invest in the company’s property business in Australia and Japan. Thakral rewarded its shareholders too — by paying out a special interim dividend of three cents a share for 3QFY2017. The biggest beneficiary, naturally, was the Thakral family, which is the company’s biggest shareholder, with a 29.94% stake at the time.

In March, the Thakral family made a partial offer of 50 cents a share, in a bid to raise its stake to just over 50.2%. The offer price of 50 cents was an 11% premium over the closing price on Feb 28. A sufficient number of minority shareholders agreed to sell their shares — including the second-largest shareholder, the Kwek family of the Hong Leong Group, which reduced their stake to 4.08% from 7.74%.

Inderbethal explains that a 29.94% stake is “never an ideal situation” to be in. The family would not be able to show the market the value it sees in its own company by increasing its stake in the open market without triggering a general offer. One way to get around that is to make a partial offer. “There’s strong underlying, fundamental value. We believe in the long-term positioning of our assets, and our investments have substantial gains to give shareholders. If we do not put our own money where [our mouth is], it doesn’t make sense, right?” he says.

As at Sept 30, Thakral’s book value per share was 101.85 cents — more than twice its closing price of 47 cents on Nov 7, valuing the company at $61.5 million and giving it a historical price-to-earnings ratio of 6.62 times. Year to date, Thakral’s share price has barely moved. It was 44 cents at the start of the year.

Will the Thakral family increase its stake further upon completion of the one-year lock-up period following the partial offer? This is something Inderbethal will not commit to for now. “If you really believe in the company and the share price remains at this price, are we buyers? It’s a no-brainer. I can’t tell shareholders what to do, but I can at least tell myself what to do,” he says.

He acknowledges that the company’s earnings were not always consistent. It was struggling to shift the product mix of its trading business from consumer electronics, where competition was too intense, to lifestyle products. That took time and marketing costs to build up new sales channels.

While earnings from the trading business were declining, Thakral’s investments in relatively new businesses, such as retirement resort joint venture GemLife, were barely starting to bear fruit. “We couldn’t tell you a good story then, because it was not yet a proven story. Today, it is different. Why are we not getting higher valuations? They will come, I am sure,” says Inderbethal.