 Chang Yeh Hong, executive chairman of Nordic Group. NextInsight file photo.WHEN COMPANIES have a dividend policy, some count forex gains and one-off gains -- while others might not -- in deciding on the dividend payout.In the case of Nordic Group, which has just reported a 61% jump in net profit for 3Q, everything that contributes to its bottomline will count, said executive chairman Chang Yeh Hong at a results briefing this week. Nordic had announced in June a dividend policy of 40% of net profit. (In 2014 and 2013, when there was not a formal dividend policy, the payout was 25% and 16%, respectively.) Mr Chang gave clarity on the dividend policy after Nordic's 3Q results came with $700,000 in "other gains" -- while the 9M results had $1.6 m -- mainly arising from the disposal of a property and forex movements (appreciation of the USD vis-a-vis the SGD). Its 3Q net profit was $3.2 million while 9M net profit amounted to $7.2 million.  Acquired on June 2 by Nordic, Austin Energy is one of the top 3 players in the insulation business in Singapore for petrochemical companies. NextInsight file photo.The 3Q result was also boosted by Austin Energy, which contributed $700-800K in net profit and $4 million in revenue.That was its maiden full-quarter contribution after it was acquired on 2 June by Nordic. So what might be the dividend yield for FY15? Taking the 9M earnings per share of 1.8 cents, and if you assume that the 4Q EPS is the same as the 3Q's, then you get 2.6 cents in EPS (and a PE of 7.5X).
As Nordic has paid out 0.4 cents a share as interim dividend, the final dividend could then be 0.64 cent a share. That would translate into a yield of 5.4% (based on the recent stock price of 19.5 cents). The yield could go up to 6+% for FY16 because of the maiden full-year contribution from Austin Energy, assuming everything else about Nordic Group stays more or less the same. Nordic looks to be a stable dividend stock, considering that Austin Energy and the other subsidiary that provides scaffolding services to petrochemical companies, Multiheight Scaffolding, continue to generate strong positive cashflow. Nordic's share price has re-rated strongly (up 82%) in the past one year on, among other things, earnings growth, a favourable dividend policy, the successful acquisition of Austin Energy and committed investor relations efforts. |
Nordic's presentation materials for the 3Q briefing are here.
