Kim Eng on 14 Mar 2012
Catalyst from Taiwan. We estimate that the spin-off and listing of Lian Beng’s subsidiaries in Taiwan could propel its valuation from $0.62 to $0.71. To recap, Lian Beng has proposed to spin off two subsidiaries (one in the engineering and leasing of construction machinery business, the other in the concrete manufacturing business) and list them on the Taiwan Stock Exchange. The proposal received shareholder approval this month. We expect Lian Beng to raise about $29m from the expected sale of 30% stake in the subsidiaries, based on a PER valuation of 11.5x and FY12 forecast earnings of $9.3m. If all goes well, we expect the listing to take place by end-2Q12.
More cash than ever, now at $185m. We expect Lian Beng to return some capital to shareholders in the form of a special dividend, which it can well afford. An additional one cent per share of special dividend works out to just $5.3m cash and will translate to an incremental yield of 2.6% on top of the existing forecast yield of 4.6%. We believe a special dividend of up to 1.6 cents per share is possible, based on its $185m cash less its committed capital for property developments, for a total dividend of 3.4 cents per share, or 8.7% yield.
Property developments at reasonable levels. Lian Beng has taken stakes in four property projects in the past 12 months. The latest was a 10% stake in the joint venture led by Oxley Holdings for the $96.2m acquisition of a freehold mixed development in Seletar Garden, the first successful collective sale this year. The total attributable development cost for the four projects is $176.4m, which is well supported by its war chest of $185m cash.
Get it before all the action begins. Buy now and be rewarded by the imminent Taiwan listing of Lian Beng’s subsidiaries and potential special dividends of up to 1.6 cents per share. This is in addition to the stock’s attractive ex-net cash FY12 PER of 1.7x, and a dividend yield that is already nearly 5.0%.
No comments:
Post a Comment