Tam Jai International's Delisting: A Bitter Pill for Minority Shareholders

Tam Jai International Co. Ltd. (2217.HK) is set to delist from the Hong Kong Stock Exchange after its Japanese parent, Toridoll Holdings (3397.T), announced plans to buy out minority shareholders. The move comes as no surprise, given the company's recent struggles with weak growth, a troubled expansion plan, and a heavy reliance on the Hong Kong market for revenue. But the news is still a bitter pill for minority shareholders, who are left with a hefty discount on their investments.

Toridoll, which already owns a 74.26% stake in Tam Jai International, offered HK$1.58 per share to minority investors, a premium of around 75.56% over the pre-announcement closing price. However, this price is still a hefty 52.5% below the original IPO price of HK$3.33. Minority shareholders who bought shares at the IPO price would be selling at a significant loss, and those who bought in at lower prices would still be selling at a discount.

The proposed buyout price is a stark reminder of the challenges Tam Jai International has faced since its listing in 2021. The company's ambitious expansion plan across Asia faltered, and a slowing economy took a toll on revenues. Even a broad revival in Hong Kong share prices in recent months failed to attract investors, indicating weak market interest in the company's prospects. The company's high reliance on the Hong Kong market for revenue, with around 94% of its revenue coming from Hong Kong, also increased its risk profile and limited its growth potential.

Tam Jai International's deteriorating profit profile is another red flag for investors. Since its listing, the company has experienced lackluster revenue growth and a steep decline in profits. Net profits have been on a steep decline, dropping from HK$203 million in fiscal 2022 to HK$117 million in 2024. In the first half of fiscal 2025, they tumbled nearly 56% to HK$36.07 million. This financial deterioration likely made the company less attractive to investors and more challenging to manage as a public entity.

The proposed buyout by Toridoll Holdings leaves minority shareholders with a difficult decision. They must weigh the discounted buyout price against the risks of holding onto their shares or selling them on the open market. The company's poor performance and limited trading volumes may have limited their options. However, minority shareholders could have considered alternative options, such as engaging with management or seeking alternative buyers, to maximize their returns.

In conclusion, Tam Jai International's delisting from the Hong Kong Stock Exchange is a bitter pill for minority shareholders, who are left with a hefty discount on their investments. The company's struggles with weak growth, a troubled expansion plan, and a high reliance on the Hong Kong market for revenue have all contributed to its decision to delist. Minority shareholders must now decide whether to accept the discounted buyout price or explore alternative options to maximize their returns.