Disposal of 625 King’s Road

Dear Members of the Board of China Motor Bus Company, Limited (“CMB”),

Disposal of 625 King’s Road

Foremost, we are pleased that CMB plans to sell its stake in the office building on 625 King’s Road for HK$ 2,375 million (“Disposal”). This is a very positive corporate action which creates value for all shareholders.

The Disposal is conditional on shareholders’ approval.

We have discussed with numerous shareholders. The consensus is that CMB should distribute all the proceeds from the Disposal to its shareholders.

Retaining any proceeds from the Disposal will result in a bloated balance sheet, in light of the lack of concrete plan on the use of proceeds and the light leverage of CMB.

As a shareholder, we are willing to vote in favor of the Disposal, on the basis that CMB distributes ALL the proceeds from the Disposal to its shareholders. Otherwise, we will not, and will urge other shareholders not to, vote in favor.

We are surprised that Dr. Henry Ngan and Dr. Ngan Kit-keung (with a combined shareholding of 31%) have undertaken to vote in favor of the Disposal, while Chairman Irene Ngan Kit-ling (who owns 12%) has not. We would like to know how the Chairman plans to vote.

Kindly contact me at +852 9835 4836 any time at your convenience if you have any questions.

Yours sincerely,

Kin Chan

Argyle Street Management Limited

2 thoughts on “Disposal of 625 King’s Road”

  1. I am very disappointed to see that CMB did not disclose any detail about special dividend in the recent announcement for voting.
    Holding excessive cash year after year makes the company ROE performs much more terrible than the industry average.
    If the huge cash from the coming asset divesting was not mostly delivered as special dividend, CMB will be defined as value trap unquestionably.
    This is a critical moment for us. I hope that you guys, as one of the most seasoned activist shareholders based in HK, play more important role in pressuring the Ngan family members. The combinable power from silent shareholders may be much bigger than we thought.


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