RADIUM's valuation has been the subject of heated debate among investors. With its heady IPO and endorsements from a multitude of market "maestros", its valuation has been under constant scrutiny. Its recent Q1 results, though perceived as lacklustre, only added fuel to this fire, stirring up a whirlwind of apprehension among retail investors who had leapt aboard the RADIUM IPO bandwagon.
However, if you take a step back and view this from a different angle, you'll see that this scenario paves the way for an attractive investment opportunity.
Many investors have overlooked a significant detail in RADIUM's Q1 results - the declaration of a dividend. This hidden gem, when observed closely, paints a brighter picture. The dividend payout stands at a robust 1.00 cents per share. Let's reverse engineer this and crunch some numbers:
§ At an IPO price of RM0.500, the yield is a solid 2.00%
§ If the price drops by 20% to RM0.400, the yield gets more attractive at 2.50%
§ In a worst-case scenario, if the price dips to RM0.300 (40% down from the IPO price), the yield stands at a hefty 3.33%
Let's turn our attention to RADIUM's largest shareholders - the Gan family. Would they sit idly and allow the share price to languish at low levels indefinitely? Absolutely not! Consider their Employee Share Option Scheme (ESOS) and Long-Term Incentive Plan (LTIP). Would these not spur them to action?
The conclusion is rather compelling - once RADIUM's results bounce back to normalized levels, expect its earnings and dividends to follow suit.
So, if the share price does indeed plummet below the IPO level, don't look at it through a lens of panic. Instead, see it for what it truly is - a potential goldmine for savvy investors. That is, of course, unless you happened to jump on the IPO bandwagon. In that case, consider averaging down to pivot towards potential gains.
Don't be swayed by the chatter of the market. Instead, tune into the facts and see the opportunity that lies beneath.