An open letter to the Board of Bauhaus (0483)
10 September 2025
To the Directors of
Bauhaus International (Holdings) Limited
Dear Directors,
As you know, I own (at latest public filing) over 8% of Bauhaus and am the second-largest shareholder after the Chairman, Winnie Tong She Man (Ms Tong), who controls 58.9%.
On 5-Sep-2025, you announced a Provisional Sale and Purchase Agreement for the purchase of a residential apartment at a purchase price of HK$8.32m plus unstated expenses. An initial deposit of HK$250k has been paid. You expect to proceed to a formal sale and purchase agreement on 19-Sep-2025. I urge you to stop right now, even though that probably means forfeiting the deposit.
At 31-Mar-2025, Bauhaus had net cash of HK$97.1m ($0.264 per share), representing 55% of Net Tangible Assets of $175.7m ($0.478 per share). Bauhaus reported a profit of HK$11.7m for the year but did not pay any dividend, and has not done so since the half-year to 30-Sep-2022, almost 3 years ago. That is disgraceful. You simply don't need to retain that much cash for the business, and you are now proving this by deploying most of last year's profit into residential property.
Under the leadership of former Chairman George Wong Yui Lam, the group adopted a lean balance sheet, selling off office and warehouse premises and distributing the surplus proceeds as dividends, boosting return on equity and delivering value for all shareholders. Now under the leadership of his ex-wife Ms Tong, you are doing the opposite. The so-called Independent Non-Executive Directors (INEDs, you know who you are) account for 3/5 of the board but have not stopped this behaviour. Now is your chance to do so.
You offered the flimsiest of excuses for the acquisition, namely "the provision of staff quarters will enhance the attractiveness and competitiveness of the Group's employee remuneration packages". That is nonsense. If you provide a rental allowance to staff then they can choose any flat within their budget, not just 1 flat owned by the group. That is a far more attractive proposition and avoids tying up capital in property. It is difficult to avoid the question "for whom in particular is this flat intended, and do they have any relationship with the directors"? Secondly, we have 164 staff, so accommodating 1 employee achieves practically nothing.
Incidentally, I note that you have also failed to update investors with same-store sales growth data for the first quarter to 30-Jun-2025, as you did in previous years. That is a reduction in transparency which leaves directors, particularly of retailers, at greater risk of being accused by regulators of withholding price-sensitive information if surprisingly good or bad results emerge later.
Yours sincerely,
David M. Webb MBE
Founder, Webb-site.com
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