03-08-2017, 07:02 PM
(03-08-2017, 05:29 PM)Scg8866t Wrote: [ -> ](03-08-2017, 04:30 PM)TTTI Wrote: [ -> ](03-08-2017, 11:49 AM)Scg8866t Wrote: [ -> ]Notice share price inching slowly up to 0.66 today. Full year result will be out end aug. Is it due time for LTC to give a bigger payout? No more excuses since they are now almost debtless and with a big cash buffer. See how it goes.
I'd be happy if that comes true, but don't bank on it.
IMO, that's highly unlikely.
They have zero debts to talk about, and large cash holdings and the business generates a ton of FCF every quarter.
Problem is the management deems it best to divert the CFs to their retail business in Malaysia.
They don't need excuses, the Cheng family has a large enough stake and the other major shareholders are dormant, so they get to do what they want.
Even if it doesn't make much business sense.
Hi TTI,
To be fair, they still have $12k of borrowings outstanding. Are you aware of Ltc's recent 40% acqusition of regata? The market value of the project is 125mil ringgit and they paid ard 26mil ringgit for 40%? Seems too good to be true. If gem residence(penang) is completely sold, Ltc will net ard 8-9mil sgd of profit, doubling their roi? I am not sure if debt is involved as the announcement wasnt detailed enough.
Will be great to have your views on this.
Regards
Yup.
26mil ringgit is only for 40%, so if we extrapolate it, they're paying a price that's a 48% discount to the assessed market value of the project.
That does sound cheap, so there's a safety buffer there.
But we gotta take into account that they have to provide shareholder's loans to Regata $2.7mil, and that's likely to be interest free.
On top of that, the investment is in ringgit, and so LTC is exposed to forex risks. SGD-MYR has been strengthening for a loooong time. Many many years.
So if the trend continues, its a headwind.
The project is not completed too, so it's not like they're buying a completed project, and we can just use the latest assessed value to determine the merits of the deal.
There are still execution risks.
And even upon completion, we don't know how the sales will be like yet
It's a mixed development, and Penang does give me more comfort compared to other states.
But I think the cheap price they got it at, reflects the execution risks they have to bear.
It's for this reason that I said I don't think we can expect a higher dividend. LTC corp is not known to give higher dividends, they've stuck to their guns for several years (I think in 1 recent year, Mr Mano queried and there was a big hoo ha about it as he stormed out of the AGM)
The markets probably also think it's a great deal, as evidenced by the rising share price since the deal was announced (I think it was back in April right? can't rem exactly)
PS. $12K of total debt outstanding is nothing la, can round down. LOL