lnderbethal Singh Thakral, CEO of Thakral Corporation AWI , sees adaptability as key to long-term success. Once a textile company with a century-long history, Thakral Corporation has since diversified into drones, senior living in Australia, beauty products and commercial property in Japan.
The CEO joined the family business in 1975 and by the 1980s, the company had ventured into consumer electronics distribution in China. During that time, they sold videocassette recorders (VCRs), video CDs (VCDs) and digital video discs (DVDs) — equivalent to YouTube and Netflix today — before the internet era took hold.
“We try to see what sectors are likely to grow over the next 20 years and even longer,” he says as he plans for the future. Though VCRs, VCDs and DVDs are now obsolete and streaming platforms dominate, Thakral has adapted by shifting to drone distribution. How did the company transition from VCRs to drones?
Inderbethal says: “We entered the drone market about 10 years ago. Back then, we were selling digital cameras and our buyers, mostly photographers and videographers, were looking to invest in drones to expand their photo and video-taking abilities.”
With an established dealer base, introducing drones was straightforward. The group now distributes drones in Sri Lanka, Bangladesh, Nepal and India. Drones are used for recreational video, agricultural spraying, seeding, as well as remote deliveries.
Inderbethal notes that Thakral has secured government support for using drones in agriculture in all its markets except India. The group distributes DJI drones, a Shenzhen-based brand with a 70% global market share. Additionally, Thakral has invested in Skylark Drones in India, a software company specialising in analytics from drone footage for the mining and agriculture sectors.
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This is just one part of the group’s business, which is divided into four segments. “It is like having four children with different personalities. We have been doing this all our lives and we don’t find them too diverse,” says Inderbethal when asked how the group divides its focus to grow all segments.
The group’s beauty and fragrance division operates in the retail sector next to the drone business. Inderbethal views this as part of its multi-channel sales strategy. The group manages prominent brands such as John Masters Organics, Maison Margiela and Ralph Lauren, as well as beauty tech products like the CurrentBody Skin LED Light Therapy Mask, which appeared in the Netflix series Emily in Paris.
Prime living spaces
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Since 2016, Thakral has been paying dividends from another investment: its over-50s lifestyle resorts in Australia. These are not traditional “old folks’ homes” but upscale social communities for people aged 50 and above, whether retired or still working. GemLife is an associate of Thakral, which was previously a joint venture with the Puljich family, with Thakral holding a 31.7% stake.
“We were doing business there when my father started to think about its ageing population and how more seniors were moving to retirement communities,” says Inderbethal, adding that since many seniors at this age have empty nests, living in such resorts offers a safer and healthier environment.
While the community aspect supports a healthy social lifestyle, the homes are purpose-built with features that can be easily adapted for future home care needs. “That way, our residents will not need to go to a hospice. They can work with home health providers. Once they move into the homes here, they don’t have to move out,” adds Inderbethal.
These thoughtfully designed homes and a 7,000 sq m clubhouse offering daily activities make the community highly appealing. “Every house is sold before completion and the demand is higher than the supply,” he says. As of June 30, the group operates 11 communities and resorts, with 10 currently occupied. These occupied resorts contain a total of 1,622 homes.
The group has 11 projects underway, including a new resort in Toowoomba, Queensland. This latest development spans 23 hectares and will feature 366 lots with a variety of standard and premium single-storey and split-level homes, as well as an A$14 million ($12.4 million) country club.
The fourth and final “child” in Thakral’s portfolio is its commercial properties in Japan. This investment is represented by the group’s 50.6% stake in Thakral Japan Properties, which has been investing in office and hospitality properties in Japan since 2014.
The group owns six commercial buildings in Japan, with two and one business hotel now up for sale. While these properties are earmarked for potential capital recycling, Inderbethal notes there is no immediate urgency to sell, as the group remains focused on securing the right price.
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This, however, does not indicate a desire to exit the Japanese market entirely. Inderbethal noted that the properties continue to generate substantial income and still hold development potential and opportunities for capital appreciation.
Given the weak Japanese yen and a stronger balance sheet, Inderbethal acknowledges the temptation to acquire more properties in Japan. However, the group will stay disciplined and focus strongly on due diligence.
Undervalued?
With its diverse segments and a pipeline of approximately 6,500 homes across 11 resorts in Australia, Inderbethal believes Thakral’s share price does not accurately reflect the company’s true value.
Since early 2023, the share price has been around 60 cents, while the net asset value was $1.17 as of Dec 31, 2023. “Our market cap is not reflecting any of these numbers and future growth potential, which is quite sad,” says Inderbethal, who feels underwhelmed. “There are structural issues with the Singapore market,” he adds.
Listed companies, he believes, are not receiving enough support. Consequently, companies like Thakral must actively seek media coverage. The group is also based in Singapore and despite Inderbethal’s dissatisfaction with the market, he appears committed to staying put.
He continues: “Singapore is such a beautiful place. I don’t want to leave this place. We will stay here for our reasons. This is the best place to be, but the market doesn’t care enough.”
As of Aug 28, shares in Thakral are trading at 64 cents, slightly up 4.9% ytd. This gives it a market capitalisation of $81.8 million, a P/E of 7.09 times and a dividend yield of 6.25%.
Thakral’s FY2023 ended December 2023 saw a 56% y-o-y decline in earnings to $8.2 million despite a 32% gain in revenue to $212.2 million due to some one-off restructuring costs to buy back Gemlife partner shares. However, 1HFY2024 is showing signs of improvement and increased growth.
Earnings rebounded in 1HFY2024 and Thakral reported a 45% y-o-y gain of $10.8 million without restructuring costs. Revenue continues to grow, 23% higher y-o-y at $128.4 million. The group has also declared an interim dividend of 2 cents, representing a dividend payout of 23.7% of 1HFY2024’s earnings.
Although the group is growing and paying dividends, the stock does not reflect this progress.
As Inderbethal says: “We are optimistic about our business in Australia owing to the favourable structural trends driving demand and we expect to record steady growth as GemLife’s earnings increase.”
Demand for DJI drones in South Asia has also risen steadily, driven by increased use across the enterprise, agriculture and consumer sectors and an expanded product range. The fragrance business has similarly grown, with a wider product selection and more points of sale.
He adds: “Our decade-long partnership with DJI continues to be fruitful, with a wider range of products entrusted to the group. As industries become more data-driven, enterprises integrate drone products for imaging needs to improve operational efficiencies and decision-making. The trajectory for our beauty and fragrance business also remains positive.”
