Author: Argyle Street Management

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

We would like to congratulate Dr. Henry Ngan on his long-overdue appointment as the Chairman of CMB.

We believe that the market is equally pleased with his appointment, as CMB’s share price (which has been up over 10% in the past month) has demonstrated.

Dr. Henry Ngan, together with Dr. Horace Ngan, was prescient in monetizing 625 King’s Road, just before the economy is roiled by violent protests. It has not escaped our attention that they were the only shareholders who undertook to vote in favor of the disposal of 625 King’s Road.

The previous leadership of our storied company failed to provide strategic direction and was delinquent in its duties to prepare for succession. We have every confidence in Dr. Henry Ngan ability to ratify the past mistakes.

We look forward to constructive dialogue with the new board led by Dr. Henry Ngan. We hope to work closely with him (as well as Dr. Horace Ngan and other minority shareholders) on further restructuring of the board and rationalizing the capital structure of CMB.

Yours sincerely,
Kin Chan
Argyle Street Management Limited

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

You announced on 2 August, that CMB will pay a special dividend of $18 per share.

We are extremely unhappy with the small special dividend.

CMB has just received $2.4 billion of sale proceeds. On top of that, CMB has $1.6 billion of cash and bank deposits. Altogether, CMB could have paid almost $90 per share of cash.

Yet you decided to pay only $18 per share, which is a meaningless number – except that the number 18 connotes “prosperity” in the Cantonese culture, from which you distance yourselves anyways.

You are as indifferent to your shareholders, as Carrie Lam is to the people.  She has forgotten that her power is from the people, just as you have forgotten that yours is from your shareholders.

Do you hear the people sing?
Singing a song of angry men?
It is the music of a people
Who will not be slaves again!
When the beating of your heart
Echoes the beating of the drums
There is a life about to start
When tomorrow comes!

Yours sincerely,
Kin Chan
Argyle Street Management Limited

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