- Following QSR Brands’ and KFC Holdings Bhd’s capital
repayment exercise, Kulim Bhd has announced that it would be receiving proceeds
of RM1.157bil.
- Subsequently, Kulim has proposed to distribute all of the
RM1.157bil proceeds in the form of a special dividend to its shareholders.
- Kulim’s special dividend would amount to about 93
sen/share based on the share base of 1.235bil. After the conversion of
warrants, we reckon that the special dividend would amount to 82
sen/share.
- We believe the special dividend would be paid in 3QFY12.
The date of the payment of the special dividend was not disclosed in the Bursa
announcement.
- Recall that Kulim owns 54% of QSR Brands, while QSR Brands
owns 51% of KFC Holdings. However, after the conversion of warrants, we
estimate that Kulim’s shareholding in QSR would be 48% while QSR’s equity
interest in KFC would be about 49%.
- The announcement of the special dividend was not a
surprise. Following the privatisation exercise of QSR and KFC by Massive Equity
Sdn Bhd, the market had been expecting Kulim to return part of the capital
repayment proceeds back to shareholders.
- What was a surprise was the size of the special dividend.
We were not expecting Kulim to distribute all of the capital repayment proceeds
as a special dividend.
- We had thought that Kulim would keep part of the proceeds
for future expansion plans. Still, we reckon that Kulim would not face any
problems financing its future expansion plans as its balance sheet is
healthy.
- At the company level, the group’s gross cash stood at RM74.8mil
as at end-FY10 while gross borrowings amounted to RM373.2mil.
- Most of Kulim’s borrowings are held by New Britain Palm Oil Ltd (NBPOL). NBPOL’s borrowings
would be deconsolidated in the future as it will be classified as an
associate.
- We maintain a BUY on Kulim for the special dividend of 93
sen/share. The group would also be a purer plantation company after the
disposal of KFC and QSR.
Source: AmeSecurities
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