KUALA LUMPUR (Aug 7): Shares in Kumpulan Perangsang Selangor Bhd (KPS) rose 1.68% in active trade at mid-morning today on a report of a possible bumper dividend payout for its shareholders.
At 10.25am, KPS rose 3 sen to RM1.82 with 1.74 million shares done.
The Edge Financial daily today reported that while the Selangor government's offer to buy out Syarikat Pengeluar Air Sungai Selangor Sdn Bhd's (SPLASH) water treatment assets at RM2.55 billion is at a 28% discount to its net book value of RM3.54 billion as at June 30 this year, shareholders of KPS on the other hand could see a bumper dividend payout.
According to CIMB Research analysts Sharizan Rosely and Kamarul Anwar, the impact on earnings excluding the 30% share of SPLASH's net profit and the potential impairment is significant but this is likely to be mitigated by a potential special dividend.
Based on the offer, Pengurusan Air Selangor Sdn Bhd will make an upfront payment of RM1.9 billion upon the signing of the definitive agreement with the remaining RM650 million being paid in instalments over a period of nine years.
KPS, which owns 30% of SPLASH, is expected to receive an upfront cash payment of RM570 million or about RM1.06 per share with the remaining RM195 million to be paid in instalments over a period of nine years. This would increase the cash and bank balances for KPS to RM651.6 million, an increase of 7.99 times from RM81.6 million as at March 31 this year.
In the event that 50% of the upfront sale proceeds received from the disposal of SPLASH is paid as a bumper special dividend, shareholders could see a dividend per share of 53 sen which works out to a whopping yield of about 29.6% based on KPS's closing price of RM1.79 yesterday.
A fund manager with a local asset management agreed with CIMB Research that a bumper dividend is likely to be given out to shareholders given the strong cash balance following the disposal of SPLASH.— theedgemarkets.com