On 29 Nov 2016, Broadway Industrial issued a circular relating to its disposal of two businesses.
On 30 Dec 2016, Broadway said the disposal had been completed.
In the 29 Nov circular, Broadway said:
1. The estimated net proceeds would be S$120 m.
(Compare that to its market cap of $99 million based on a recent stock price of 21 cents).
2. Approximately S$50 m would be used to repay most of the Group’s banking facilities.
3. Approximately S$30 m would be for the general capital management of the Group and financing of working capital of the Group’s remaining businesses -- namely, the Hard Disk Drive business, mobile devices business and automotive and industrial business.
|
Stock price |
21 c |
|
52-week range |
9.8 – 23.5 c |
|
PE (ttm) |
-- |
|
Market cap |
S$99 m |
|
Shares outstanding |
470.9 m |
|
Dividend yield |
-- |
|
Year-to-date return |
10.5% |
|
Source: Bloomberg |
|
4. Approximately S$40 m for distribution to shareholders.
This distribution – or dividend -- works out to 8.49 cents a share, which is substantial relative to the stock's recent trading prices.
Trouble is, Broadway’s circular didn’t say exactly when the distribution would be made.
“Any distributions to be made to Shareholders will be as and when the Board deems appropriate and will be subject to industry conditions and the performance of the Company’s remaining businesses.”
Will the dividend be announced with the upcoming full-year 2016 results? We have only a short time to wait for the answer.
 Broadway is a global leader in the manufacture of HDD actuator arms. Company photo After the 8.49 cent dividend is paid out, the remaining NTA is still substantial. According to the circular, post-disposal, the NTA would be 38.72 cents a share, assuming the disposal is done on 31 Dec 2015. After deducting 8.49 cents for the dividend, the NTA would still be substantial relative to the current stock price. Two other interesting things to note: a) At the EGM on 14 December 2016 to seek shareholders’ approval for the disposal of the businesses, Broadway also sought the green light to buy back its shares. b) Broadway now is left with its Hard Disk Drive business, mainly. In its 3Q16 statement, Broadway said its HDD business experienced “lower revenue”. At the Group level, a $1.6 million net loss was incurred. |