A substantial Bauhaus International (HKG:0483) shareholder has asked the apparel company to drop plans to buy a residential flat in Hong Kong, according to an open letter published Wednesday.

Activist investor David Webb, who owns over 8% of the business, said the stated reason for the purchase to improve staff benefits was "nonsense."

Webb instead suggested the company provide a rental allowance to staff to avoid tying up capital in property.

Webb also noted the company had not paid a dividend to shareholders since September 2022, despite posting a profit of HK$11.7 million in its most recent fiscal year.

"That is disgraceful," Webb said.