Thursday, May 9, 2013

Pacific & Orient Berhad (P&O) Fundamental Strong with Special Dividend Coming Soon!

Dear all,
As promised, I will write about this stock named P&O. This stock is going to fly up high very soon. If you have not purchase this stock, go and get it. There are some factors that will cause this stock to fly up high. you can read about them below:

1. Selling of 49% Stake of Shares to Sanlam
This selling of their share to Sanlam have generated total cash RM270,000,000 to P&O.The management has mentioned to use a part of this big amount of money to give special dividend.

2. Special Dividend (As promised but not yet announce.)



According to the Circular to Shareholders on 15 February 2013 (Refer here: Circular to Shareholder P&O 15 February 2013), the total proceed of the selling of 40% share to Sanlam generated total cash of RM270,000,000.

P&O announced to give out part of the RM270,000,000 as Special Dividend to shareholders and to be completed in 3 months period. Since the announcement is on February 2013, now it is May 2013, it is 3 months. Soon, P&O will announce this Special Dividend. Announcement will be around these few days or weeks.

3. How much is the Special Dividend?
Based on the circular to shareholders, P&O will give out RM37,000,000 as Special Dividends. Total share of P&O in the market is 245,954,000 units.

Special Dividends per share = RM37,000,000 / 245,954,000 = RM0.15 per share.

Total of 15 cents will be given as Special Dividend!

4. What is the P&O Stock price now?
The stock price is now selling at RM1.48. If you buy in the share now and wait for the special dividend, you are going to get more than 10% return just by getting the dividend.

% return = 0.15/1.48 x 100% = 10.14%

5. Target  Price for P&O
Based on i3Investor, the target price is around RM1.37 - RM1.80. (Check the P&O target price)

Is it a good buy? I would say yes!

What is the possible return?
If announcement is made, we are expecting the stock price to go up to around RM1.60 to RM1.80.
Assume you buy 5000 units at RM1.48.

Total Money Purchase = 5000 x RM1.48 = RM7400
Sell at RM1.65 = 5000 x RM1.65 = RM8250
Earnings = RM850
% earnings = 11.5%

From my point of view, it is very likely that P&O will announce Dividend + Special Dividend together. So, it mean that we can expect P&O to announce Dividend + RM0.15 which might be more than RM0.20 div per share.

If this is announced, I think very likely this stock will fly up high. Stay tuned and watch (if you don't dare to buy)!

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