HAPSENG, a dividend powerhouse in the making

2013-06-25 16:40:23.0  |  Derek Dan
dividend, hap seng, share price
HAPSENG share price scaling to a new height

Hap Seng Consolidated Berhad (HAPSENG) registered a flattish result in 1Q2013, owing to the subdue performance across all divisions, except the property division.

Despite the uninspiring quarterly result, HAPSENG has dished out a record-breaking interim dividend of 8 sen per share, much higher than its quarterly earnings of 4.86 sen per share.

The dividend surprise is a testament of a healthy balance sheet and therefore the company is utilizing its excessive cash to reward the shareholders.

Dividend policy - 50% of net profit

HAPSENG is renowned to reward its shareholder with good dividend.

Since 2011, the board of HAPSENG has committed to pay out 50% of its profit as dividend.

Total dividend for FY2012 stood at 10.5 sen, translated into a net yield of 7% (based on share price 1.70)

2013 could be another record year, as the 8 sen interim dividend already makes up 80% of the total payout in 2012.

Undemanding valuations

For financial year ending 2012, HAPSENG’s NAV stood at 1.61 per share, against the current share price of 1.90, translated into attractive PBV of just 1.2x.

This, couple with single digit PER, HAPSENG valuation is considered inexpensive.

HAPSENG has been continuously and recently, aggressively buying back its own share. To date, the cumulative treasury share has reached a staggering 6.14%.

Share price hovering at all-time high

Boosted by the dividend announcement, HAPSENG share price has briefly run up to RM2.00, the highest level since share split in July 2011.

The share price is now hovering at all-time high of RM1.90 and above.

We believe there is more upside to the price, on the backdrop of increased dividend payout, undemanding valuation and aggressive share buyback, although the corporate business forefront remains lackluster.

Recent speculation about the demerging of its property arm has generated some positive interest to the stock, and if materialized, could be a catalyst for further run up of the share price.

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