Excerpts from analysts' reports
OSK-DMG highlights likely rise in King Wan's dividends
Analyst: Lee Yue Jer (left)
Kaset Thai Industry Sugar (Kaset Thai)’s IPO to go ahead. The Bangkok Post published an article on 4 April that stated that Kaset Thai plans to float 957.83m IPO shares from April 21-23 to raise funds for its expansion.
This is the key catalyst that investors have been waiting for and comes as a positive surprise after the recent news that the IPO deadline had been pushed back to Aug 2014.
IPO price not confirmed but King Wan will benefit either way. If the IPO is priced high, King Wan will be able to offload its stake in its Thai associate at an attractive price during the IPO period.
If the listing multiple is on the low side, the company will receive more shares in Kaset Thai, as the value of its stake is fixed at c.SGD50m. King Wan will, thus, enjoy upside potential plus possible yield on its Kaset Thai shares. Either way, the company’s shareholders will benefit from the upcoming IPO.
| Video (by Bangkok Post) on the operations and history of Kaset Thai Industry Sugar. |
Raising dividend forecast for FY14 final dividend. We expect King Wan to liquidate part of its Kaset Thai stake regardless of the IPO valuation. This will result in sufficient cash inflow to pay a higher dividend. We believe the potential final dividend for FY14 is in the 1.5-2 cents range, but estimate it at 1.5 cents to be on the conservative side.
Time to double the dividend, maintain BUY and SGD0.43 TP. We continue to expect King Wan to pay a 3 cents dividend every year from FY15 onwards, with 1.5 cents from its core businesses and 1.5 cents from the continued liquidation of its Kaset Thai stake. This raises the foreseeable sustainable yield to 10%. Maintain BUY and SGD0.43 TP, which is based on a 7% yield.
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