THE INVESTMENT APPROACH OF CALVIN TAN

PELIKAN (5231) An Asset Play now unlocking its Value by Asset Disposal and giving out 20 Sen Special Dividend, Calvin Tan

calvintaneng
Publish date: Thu, 21 Oct 2021, 09:17 PM
calvintaneng
0 1,705
Hi Guys,

I have An Investment Approach I which I would like to all.
Following Message

Dear Friends of i3 Forum,

Today Pelikan announced an EGM to vote for An Asset sale

See

PELIKAN INTERNATIONAL CORPORATION BERHAD

 

Type of Meeting Extraordinary
Indicator Notice of Meeting
Description 
Pelikan International Corporation Berhad ("PICB")
- Notice of the Extraordinary General Meeting to be conducted on fully virtual basis and entirely via Remote Participation and Voting facilities
Date of Meeting 05 Nov 2021
Time 03:00 PM
 
Venue(s) 
Online Meeting Platform via TIIH Online website at https://tiih.online

provided by Tricor Investor & Issuing House Services Sdn Bhd

Malaysia
 
Date of General Meeting Record of Depositors 27 Oct 2021
 

Resolutions
 

1. Ordinary Resolution
Description 
Proposed disposal by Pelikan Group GmbH, a subsidiary of PICB, of its logistics centre located at Straße Der Einheit 142-148, 14621 Falkensee, Germany for a consideration of EUR81,000,000 to be satisfied entirely in cash and the subsequent proposed lease of parts of the property by Pelikan Group GmbH from HE4 Falkensee 2 S.àr.l.
Shareholder’s Action For Voting
 


 

Please refer attachment below.

Attachments

PICB - Notice of EGM.pdf

 

Let us take a look

NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting (“EGM”) of Pelikan International
Corporation Berhad (“PICB” or the “Company”) will be conducted fully virtual basis and entirely
via Remote Participation and Voting facilities provided by Tricor Investor & Issuing House Services
Sdn Bhd via TIIH Online website at https://tiih.online on Friday, 5 November 2021 at 3.00 p.m. for
the purpose of considering, and, if thought fit, passing the following ordinary resolution, with or
without any modifications:-
ORDINARY RESOLUTION
PROPOSED DISPOSAL BY PELIKAN GROUP GMBH (“PGG”), A SUBSIDIARY OF PICB, OF
ITS LOGISTICS CENTRE LOCATED AT STRAßE DER EINHEIT 142-148, 14621 FALKENSEE,
GERMANY FOR A CONSIDERATION OF EUR81,000,000 TO BE SATISFIED ENTIRELY IN CASH
(“PROPOSED DISPOSAL”) AND THE SUBSEQUENT PROPOSED LEASE OF CERTAIN PARTS
OF THE SAID PROPERTY BY PGG (“PROPOSED LEASE”) (“COLLECTIVELY REFERRED TO
AS THE “PROPOSALS”)
“THAT subject to the approvals being obtained from all relevant authorities and/or parties, approval
be and is hereby given to PGG, a subsidiary of the Company, to dispose of the freehold land and
building located at Straße der Einheit 142-148, 14621 Falkensee, Germany (“Property”) to HE4
Falkensee 1 S.à r.l. and HE4 Falkensee 2 S.à r.l. (collectively, the “Purchasers”) for a total cash
consideration of EUR81,000,000, subject to the terms and conditions as stipulated in the Sale and
Purchase Agreement dated 7 July 2021 entered into between PGG and the Purchasers;
AND further, subject to the impleme
 
PELIKEN IS SELLING A FREEHOLD LAND WITH LOGISTIC ASSETS FOR EUR81,000,000
 
 
This was first proposed on July 8 2021
 
See the details
 
2.9 Expected Gain Arising from the Proposed Disposal
Based on PICB’s audited consolidated financial statements for the FYE 2020, PICB and its subsidiaries (“PICB Group” or the
“Group”) is expected to realise an estimated one-off gain of RM184.83 million in relation to the Proposed Disposal as follows:-
 
 
Disposal Consideration
399,330,000
Less: Audited NBV as at 31 December 2020
(180,997,000)
Estimated expenses for the Proposed Disposal
(12,800,000)
Estimated tax expenses
(20,706,000)
 
Estimated gain of the Proposed Disposal
Rm184,827,000
 
NOTE; ASSETBOOK VALUE: RM180.997 MILLIONS
PROFIT FROM DISPOSAL: RM184.827 MILLIONS WHICH MEAN PRICE HAS DOUBLED SINCE ITS PURCHASE.
 
 
From the disposal Peliken will get a  CASH OF RM399,330,000
 
How much per share value
 
Look at the last qtr result & from there we get a short - cut calculation of the Cash proceeds
 
 

SUMMARY OF KEY FINANCIAL INFORMATION
30 Jun 2021
 
INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR
CORRESPONDING
QUARTER
CURRENT YEAR TO DATE
PRECEDING YEAR
CORRESPONDING
PERIOD
30 Jun 2021
30 Jun 2020
30 Jun 2021
30 Jun 2020
$$'000
$$'000
$$'000
$$'000
1 Revenue
287,326
255,412
489,736
462,690
2 Profit/(loss) before tax
20,848
20,590
11,458
14,304
3 Profit/(loss) for the period
18,027
20,172
7,148
11,317
4 Profit/(loss) attributable to ordinary equity holders of the parent
17,948
20,096
5,223
11,762
5 Basic earnings/(loss) per share (Subunit)
2.98
3.33
0.87
1.95
6 Proposed/Declared dividend per share (Subunit)
0.00
0.00
0.00
0.00
   
AS AT END OF CURRENT QUARTER
AS AT PRECEDING FINANCIAL YEAR END
7 Net assets per share attributable to ordinary equity holders of the parent ($$)
0.7700
0.7600
 
Above results showed Peliken made Rm17.948 Millions which is equal to 2.98 sen a share
 
So 

RM399,330,000 divides by Rm17,948,000 multiply by 2.98

= 22.249 sen x 2.98

= 66.30 sen CASH a Share

 

Today Peliken closed at 47.5 sen

So at 66.30 its Cash 1.39 times share price

 

Estimated net profit from disposl is 

See

Estimated gain of the Proposed Disposal
Rm184,827,000
 
= 30.68 sen
 
This Net Gain of 30.68 sen will be reported in the Qtr when Cash is Received
 
 
UTILISATION OF PROCEEDS
Subsequent to the Announcement, the Board wishes to clarify that the total proceeds arising from the Proposed Disposal of EUR81.0 million (equivalent to approximately RM399.33 million) are proposed to be utilised/varied as follows:-
Proposed utilisation
Expected timeframe
for utilisation upon completion
of Proposed Disposal
 
Repayment of bank borrowings (a)
Within 3 months
RM200,000,000
 
Working capital requirements (b)
Within 12 months
RM41,290,000
 
Special dividend (c)
Within 6 months
RM120,640,000
 
Internal reorganisation related cost (d)
Within 12 months
RM24,600
 
Estimated expenses (e)
Within 3 months
RM12,800,000
 
Total proceeds
RM399,330,000
 
Note: RM120,640,000 will be given out as a Special Dividend
 
How much per share?
 
Again the formula is
 
RM120,640,000 divides by Rm17,948,000 x 2.98
 
= 6.72 x 2.98
 
= 20 Sen Per Share
 
 Pelikan will be paying out 20 Sen as Special Dividend
 
Now Peliken will also use Rm200 Millions from sale proceeds to pare down borrowings. In future this bank interest saving will show up as better profits
 
Let's take another look at Peliken latest result below
 
 
 

SUMMARY OF KEY FINANCIAL INFORMATION
30 Jun 2021
 
INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR
CORRESPONDING
QUARTER
CURRENT YEAR TO DATE
PRECEDING YEAR
CORRESPONDING
PERIOD
30 Jun 2021
30 Jun 2020
30 Jun 2021
30 Jun 2020
$$'000
$$'000
$$'000
$$'000
1 Revenue
287,326
255,412
489,736
462,690
2 Profit/(loss) before tax
20,848
20,590
11,458
14,304
3 Profit/(loss) for the period
18,027
20,172
7,148
11,317
4 Profit/(loss) attributable to ordinary equity holders of the parent
17,948
20,096
5,223
11,762
5 Basic earnings/(loss) per share (Subunit)
2.98
3.33
0.87
1.95
6 Proposed/Declared dividend per share (Subunit)
0.00
0.00
0.00
0.00
   
AS AT END OF CURRENT QUARTER
AS AT PRECEDING FINANCIAL YEAR END
7 Net assets per share attributable to ordinary equity holders of the parent ($$)
0.7700
0.7600
 
 
This qtr earns 2.98 sen
 
Annualized 2.98 x 4 
 
= 11.92
 
Price is 47.5 sen
 
P/E = 47.5 / 11.92
 
= 3.98
 
So is Pelikan Annualised forward P/E only 3.98?
 
The honest answer is a no.
 
Why not?
 
Because Peliken's business of School stationary is seasonal. It depends on School reopening when Students will buy more pens and stationary. So a more appropriate P/E should be around 10.
 
 
 
With this Asset sale & paring down of debt will Peliken show further improvement in its business?
 
 
In any case the Asset disposal is not a One Off gain only. Its Net Asset Value is 77 sen which mean that there is another possibility Pelikan could dispose more assets to unlock value & reward share holders.
 
Peliken now 47.5 sen
 
Upside one year target price is Rm1.00  (or its revised NAV of 77 sen to Rm1.00)
 
Note: this is based on its NAV (revised book value)
Its business if can improve will be added bonus
 
 
Best Regards
 
Calvin Tan
 
Please buy or sell after doing your own due diligence or consult your remisier/Fund Manager
 
 
 
 
 
Please note:
 
A MUCH BETTER BUY NOW WOULD BE 2ND & 3RD LINER OIL PALM SHARES AS CPO OVER RM5,200 WILL SEE FANTASTIC TURNAROUND FOR ALL OIL PALM RELATED STOCKS
 
 
 
 
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Discussions
1 person likes this. Showing 11 of 11 comments

calvintaneng

Peliken has Pelican as its logo

Hopefully time for it to fly

https://www.youtube.com/watch?v=KjsBkElRDSk

2021-10-21 22:13

vcinvestor

boss.. spell the company's name correct la. its Pelikan not Peliken

2021-10-22 14:28

calvintaneng

oh thank you

Will change is immediately

20 sen Special dividend is announced again

See

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3202626

2021-10-22 15:09

Bizfuneng

Haven't seen the support volume yet.

2021-10-22 15:18

vcinvestor

its PeliKAN not PeliKANNOT

2021-10-22 15:21

calvintaneng

ok got it

it is peli CAN

CAN NOT CANNOT

WELL DONE!!

2021-10-22 15:53

Bizfuneng

Haha....its just cannot.

2021-10-22 15:54

Bizfuneng

Hopefully it can fly soon!

2021-10-22 15:55

purple70

Latest QR of 2.98 is a flash in the pan! If extrapolated , this means EPS of approx. 12 sen pa. Such an annual earning is impossible for this Co in its current set up, structure and capacity. Thus, PE valuation is misleading more so given the non accretive business it is in!

Current price is app 50 sen, which has partly factored in the 20 sen dividend, thus assuming ex div value of 50-2-=30 sen, and the multiples of 15 for this business, it derives EPS of 30/15 = 2, which in itself is a bloated earnings!

Doubt if any other sale of asset will bring in any additional value without sacrificing earnings quality! Those in the money should be careful and exit!

As shareholder, I m yet to receive the EGM notification and am sure many are in the same connundrum too!

2021-10-24 18:09

purple70

If one values it on combo of NTA and disposal gain only - Current NTA is 77 sen. the sale will bring in RM185mil, ie gain of 31 sen, thus valuing it at RM1.08 cum dividend!

The only laggard here is, if the operations will be earnings dilutive!

As long as PEILKAN is profitable, such above level should stay!

2021-10-24 18:33

calvintaneng

I already called Pelikan Office and they confirmed that Egm will be on Nov 5 for voting of assets sale

As the assets disposal has shown a clear 100% profit since purchase we can also see other assets are similar

So by way of deduction we can also give a general rule that other assets should also increase by the same quantum of 100%

From here we can multiply Nav of 77 sen by 2 which is Rm1.54 (if revalued and updated to current value)

Taking Benjamin Graham required 30% discount to Nav the intrinsic value of Pelikan
Rm1.54 x .7

= Rm1.07

Our target price of Rm1.00 is still below intrinsic value with 30% margin of safety

As for P/E with the Cash settlement of Rm200 million loans there will be a saving on bank interest of Rm8 millions per year which will show up in lower gearing and higher profits

The Extra 10 sen surplus could be used to generate more revenue and profits

If not for this generous unlocking of value by assets disposal and dividend payout of 20 sen we would not have given Pelikan a second look

By this very pro active move we see Pelikan is "doing something " positive

2021-10-24 19:48

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