Why I luv King Wan: The dividend yield is a solid barrier to downside risks. The dividend will be supported by its strong operating cashflow. Just look at its operating cashflow track record of S$7m, 8 and 13 in FY2011, 12 and 13.
The annual dividend of 1.5 cents requires a core net profit of onlyS$5.2 million. And you know, their capex is minimal. That's the beauty of it.
If you accept that the 1.5 cents is quite assured, the dividend yield of 4.7% (stock price 32 cents) can be viewed confidently as a barrier to a sharp fall in the stock price .
Next, consider the KTIS shares that King Wan holds and which already are valued at nearly S$50 million. OSK DMG expects a 1.5 cent a share to be returned to shareholders a year over 10 years -- it's on average -- the yield gets bumped up to 8.5%.
Aside from this juicy yield, it's reasonable for investors to expect a double-digit capital gain as the stock price adjusts upwards and the yield gets compressed (for late-comers to the party ) in the next few months (?) or whatever period. Let's watch .