May 01, 2016 - 11:09am EST by
2016 2017
Price: 14.20 EPS 0 0
Shares Out. (in M): 5 P/E 0 0
Market Cap (in $M): 75 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 75 TEV/EBIT 0 0

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  • Sum Of The Parts (SOTP)


Retail Holdings (RHDGF) is a slow motion liquidation which is deeply undervalued on a sum of the parts basis.  RHDGF has a liquidation value that is approximately 50% greater than its current share price.  The company has been liquidating its holdings since 2007, and is down to three main operating businesses.  The recent sale of Singer Thailand makes it more likely that management will meet its publicly stated objective of liquidating the business in the next two to four years.


Note that this is a very illiquid stock that usually trades “by appointment”, and is best suited for PAs.


Retail Holdings is a successor to the storied Singer sewing machine business, and has been doing business in Asia since the 1870s. RHDGF was created as a result of Singer’s bankruptcy in 2000.  Retail Holdings is a true holding company with just 4 corporate level employees.  RHDGF owns 54.1% of Singer Asia, which in turn owns controlling stakes in the publicly traded entities that operate Singer retail stores in Bangladesh, India, and Sri Lanka. Singer Asia sold its subsidiaries in Thailand and Pakistan in the past year, and has consolidated its remaining operations into three major operating units.


The sum of the parts math is fairly straightforward – the three main operating units are all publicly traded.  The other assets at RHDGF are cash and a note receivable from the sale of RHDGF’s sewing business and worldwide trademark in 2004.  The note was recently written down to zero (the $23.8 million loss was incurred in 2015).  I am assuming no recovery on the note.


The values are as follows:


                                    Market            Percent         

                                    Cap                 Owned            Value


Singer Bangladesh        138.4              72.80%           100.4

Singer Sri Lanka           102.5              86.10                88.3

Singer India                   29.2              75.00                21.9

Other                                                                          1.8

   Value of Singer Asia                                               212.4


Retail Holdings’ Share                          54.1%             114.9

Cash at RHDGF                                                               .7

Note Receivable                                                            0.0 

    Value of RHDGF                                                     115.6


   Value per Share                                                     $21.85


Note that the value above excludes the $52.6 million of cash at Singer Asia that was used to fund the $5.00 dividend paid by RHDGF in April. 


RHDGF has indicated that it intends to pay an additional $1.00 per share later this year.  Distributions have generally been treated as a return of capital.  The company is domiciled in Curacao, so there is no tax at the holding company level.


The three main operating units are all profitable.


                                       Revenue                  Net Income

                                    2015   2014               2015   2014


Bangladesh                    88.7    92.8                  4.8       3.9

India                            45.8     43.5                  1.6       1.1  

Sri Lanka                     283.7  226.6                 11.1      6.9  






Liquidity is extremely limited.  I view it as a roach motel.


Value is concentrated in three emerging markets, with all the obvious macro risks.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


Stephen H Goodman, age 71 and his wife own approximately 26% of the company.  His stewardship over the years has been very good.  Management compensation at the holdco runs less than $2 million per year. 


The company has publicly indicated that it intends to complete the liquidation in two to four years.


Singer Asia consolidated two partially owned Sri Lanka subsidiaries into Singer Sri Lanka in January 2016.


On March 23, Singer Asia sold 6% of Singer Sri Lanka to institutional investors for $7 million.  According to the company’s press release: "The placement, which represents another step in ReHo's strategic program to monetize the underlying value of the Company's assets, is intended to introduce the Sri Lanka company to international institutional investors, create additional liquidity in the stock, while meeting the Sri Lanka requirement that publically traded companies have at least a 20% public shareholding    

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