KPS: To Special D or not to Special D?

Update on KPS

1^st of all I would like to apologise for going missing again, but it’s really not easy to make ends meet these days. Really sorry for not posting much lately as I was busy with my job related matters and it is really not easy to write long article (spend hours and days due to fact finding). Some suggested me to write briefly, however, I don’t tolerate when it comes to quality, hence, a good article with good supporting will need lots of time.

On the other hand, I'm considering to JV with remisier to set up a platform where those client whom trade under this remisier will always get to have the latest update from me and some market comment from me. Those whom are interested, u are welcome to pm me anyway, this is not final yet as I would have to look at the responds 1^st before making any decision.  You can PM me on my FB through this link.

https://www.facebook.com/bigcanonfinance/

Federal and Selangor government had finally came out with their latest offer for SPLASH by last week. They offer RM2.55b where RM1.9b will be paid upfront, and another RM650m will be paid via instalments throughout a period of nine years.

Source: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=88697&name=EA_GA_ATTACHMENTS

Last week, we saw Gamuda and KPS agreed on the terms and willing to sell SPLASH to the state govt. Since KPS has 30% shareholding in Splash, this will yield them with a total of RM2.55b* 0.3= RM765m.

Let’s analyse how they will get the money.

1^st Tranche: RM1.9b * 0.3 = RM570m

Remaining Tranche: RM765m – RM570m = RM195m

RM195m/ 9 years = RM21.67m per annum.

So the total of RM765m equal to how many cash per share?

Total shares of 537.39m.

RM765m/ 537.39m shares = RM1.4235 per share.

However, KPS won’t get the share in 1 shot, as a result, we will take RM570m to calculate whether how much cash per share they will get.

RM570m/ 537.39m shares = RM1.061 per shares for the 1^st year.

RM21.67/537.39m shares = RM0.0403 per shares for the 9 years.

The amount above is only calculating the amount that is going to be receive by KPS, however, it is unclear whether do they have any outstanding.

We have knew the total sales proceed that KPS will be getting and now there is a few questions to be addressed.

1^st Is there any outstanding from SPLASH which required KPS and Gamuda to settle?

2^nd If there is, how much will it be? And how much money will remain?

3^rd Will KPS give special dividend if they have extra money from the sales proceed after settling the outstanding?

I bet these 3 will be the most crucial question for all the investors.

In order to know whether if KPS will give out Special Dividend, let’s take a look at their balance sheet. 

Source: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=200835&name=EA_FR_ATTACHMENTS

KPS have RM81.5m cash, receivables of RM470m.

On the other hand, the non-current borrowing is standing at RM 474.9m and current liabilities at RM99.7m. Which makes up a total of RM 574.6m.

Looking at the cash position and the outstanding, it is belief that KPS are capable to pay Special Dividend.

Anyway, they can also become a net cash company by paying off all their outstanding. So, it is still up to KPS management to decide whether to pay Special Dividend or not, if they are paying, then we can expect some movement on their share price. 

Some will ask me if KPS is still doing well at this price? My answer would be, it depends on if they are going to pay Special Dividend or not, as well as the quantum of Dividend. 

We will have to wait patiently for BOD's decision on this matter. 

Please always bear in mind that Big canon is not giving any buy or sell call, always bear in mind, Big Canon don’t give buy or sell call. Our articles only serve for education & sharing purposes. 

May all the HUAT be with us!

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