A lot of investors are buying into the company with the hope of a special dividend once the disposal of Splash is completed. This was based on previous board decision to give special dividends to shareholders upon disposal of Kumpulan Hartanah Selangor Berhad (KHSB) to Kumpulan Darul Ehsan Berhad for RM212.8mil back in Sept 2013.
The difference between the disposal of KHSB and Splash is that the disposal of KHSB resulted in a gain on disposal to KPS of around RM335mil where else the disposal of Splash will result in a loss of disposal (amount will depend on when the disposal will take place. In the September 18 announcement, the loss on disposal was around RM330mil). KPS has already taken a big impairment on its investment in Splash in FY18 to reflect the lower offer made by Pengurusan Air Selangor.
Another issue that investors need to take into account is KPS future profit after disposal of Syabas. Based on the 4Q18 result (where Syabas contribution was zero to reflect the potential disposal), the company could potentially deliver a profit of RM17.4mil to its share holder per quarter. However, the quarter high result was also due to a one-off fee derived from one of its international licensees which is non-recurring in nature. Excluding this, the profit could potentially fall to only around RM 2-3mil. By simply extrapolating the quarterly profit, KPS could potentially only deliver a profit of RM12mil to its shareholders upon disposal of SPLASH.
That being said, with the cash received from the disposal, KPS can actually use it to pay off all of its debt. This will result in a higher profit of around RM10mil per quarter derives from savings of interest payments. With the interest payment savings, the full year profit could potentially reach around RM50mil.
At the current share price, KPS would be valued at around 15x PE which is not that expensive. However, this all depends on what the company will do with the cash received from the disposal of Splash. If the company decides to pay more dividends then the cash left for payment of debt would be lower hence resulting in lower PAT in the future (as the company will still have to pay interest payment).
If you are looking to hedge your portfolio outside of KPS (due to the uncertainties of Syabas’ proceeds utilisation), I would recommend you to look at MBMR. (https://klse.i3investor.com/servlets/stk/pt/5983.jsp)
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.4x PE based on FY18 profit of RM166mil. PB is low at only 0.7x BV.
FY19 should deliver another profit growth year to the company. Profit growth will again be driven by the performance of Perodua (via MBMR 22.6% holdings in Perodua) from the still strong sales of new Myvi, sales of SUV Aruz and the introduction of the newly revamp Alza sometime in the 2H19. Aruz which commands a higher margin compared to other models, will help improve the total profit margin of Perodua (which will flow to MBMR’s bottom line as well).
MBMR is expected to achieve a profit of RM200mil in 2019. At the current share price, the company is being valued at only 5.3x which is a lot lower than the industry average of 15x PE. As an example, UMW (another company with exposure to Perodua) is currently trading at a PE multiple of almost 20x.
no commonsense !! do your homework properly la syabas is owned by air selangor..wat does it has to do w kps ? and why r u promoting mbmr here ?..this is for kps counter la....
KUALA LUMPUR, March 27 — Gamuda Bhd’s net profit declined 23 per cent year-on-year to RM173.14 million for the second quarter ended Jan 31, 2019, as the group had stopped recognising its share of Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) profits.
The water concessionaire, previously 40 per cent owned by the group, was sold to Pengurusan Air Selangor Sdn Bhd for RM2.55 billion last year. The upfront payment of RM1.9 billion is expected to be received in March 2019.
""Another issue that investors need to take into account is KPS future profit after disposal of Syabas. Based on the 4Q18 result (where Syabas contribution was zero to reflect the potential disposal), the company could potentially deliver a profit of RM17.4mil to its share holder per quarter."-I think it should be Splash instead of Syabas. Quite interesting statement.
my remisier told me this morning, he said Gamuda already go above Banker's Tp but kwap and Epf are still Buying----Why? He believe next week Buy order from BB will increase further
Last round Affin Brokerage traded Kps the most up to 2.0.....affin broker estimate kps free float is around 10--25million.....The rest are tightly held. Any Hard Goreng without contra players will surely reached 3.0
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
JadeSchira
544 posts
Posted by JadeSchira > 2019-03-24 22:27 | Report Abuse
No delay. Look at e&o, Wan Azmi already hinted gettig payment soon.