KINV

Buy @ $0.335

A new addition to my portfolio. Heard a tip today that they may be close to declaring a 9ct Special Dividend…

I had done some research before when the same tipster told me about the potential of King Wan which was back then, waiting for the listing of KTIS (Sugar biz, one of the largest in Thailand) in Thailand. King Wan had sold two of their associates (20% owned) in exchange for shares in KTIS (pending a successful listing in SET). This dragged for a while and there're in fact many analysts' write-up over the past couple of years.

When KTIS was finally listed this year, it's share price went down as Thailand was in political turmoil…

Anyway, back then, I decided to give it a miss as there were huge uncertainties..

Today, after rechecking AR2014 (Mar-14) & Q1 (Jun) results, I think there's a very good chance of a Special Div payout in the future. Fm Q1 results, there's an "Available-for-sale investments" = $42.2m or 12ct / share. This must be the latest market valuation (Jun-14) of the KTIS shares they'd obtained. However, in a couple of analysts' reports I'd read fm nextinsight, they were projecting that King Wan will likely pay it out over an extended period of time eg. 10 years. King Wan CEO, who was quoted for those articles also did not specifically say they won't pay out the gains. Instead, she stated that KTIS shares will have to be first sold and they plan to do it over a longer period of time as they believe KTIS biz is attractive.

Next, I looked at their Properties, which is more related to my latest tip.

Fm AR2013, they only have one leasehold property at 8 Sungei Kadut. 30yrs lease fm Mar-91 ; 12,494sqm ; Cost $8.28m ; Book Value $2.5m. A check with www.commercialguru.com.sg plus a recent transaction in the same area gave me a ball-park idea that it may be worth more than $15m – $20m. Add in their latest Cash = $15mil, With the outstanding no. of shares = 350m, they'd need a Cash of $31m to pay 9ct / share. So, yes, it's possible…

However, the core biz of King Wan is in M&E works involving Plumbing & Sanitation, Electrical and Rental of Portable Toilets. The leasehold property most likely serves as their Office (AGM is held there), Factory & Warehouse. I doubt that they'll sell it, unless it's a Sale-and-Leaseback kind of agreement.

In addition, they have also bought a Vessel and chartered it out for 3-years. They have also recently gone into a JV to build and operate a Foreign Workers' Dormitory.

In conclusion, their Core Biz is not fantastic as it's related to the Properties mkt, which is currently not too healthy. Further, going into different biz is either diversification or diworsifiaction… only time will tell. Revenue seems to be falling, altho' EPS stays flat for the past 2 years. Balance Sheet wise, Cash and Debts are almost the same.

The key attraction is their KTIS shares (listed on 28-Apr-14) which is valued at 12ct / share… 😀

References

• 11-Aug-14 : Q1 (Jun-14) Results  –  Financials ; PR
• 15-Jul-14 : Wins $25.5m worth of M&E Contracts
• 29-May-14 : Q4 (Mar-14) Results – Financials ; PR
• 21-May-14 : Invests in New workers' Dormitory Biz
• 25-Apr-14 : Receipt of 116.32m KTIS Shares @ 10THB / Share worth S$45.4m – PR ; Annc
• AR2014 (Mar-14) 

PS.  After presenting the above to my tipster, I was told that they had made a mistake… Special Div not fm Sale of Property but rather, Sale of KTIS shares…. I followed up to check on KTIS volume. Avg = 15mil+ but past 3 days, ~35mil ~ 50mil (also 3 sessions 1 wk back 30mil to 60mil). Yes, we do see a higher than average daily volume for the past week but note that King Wan have a total of 116.32m KTIS shares. So, if they'd been selling, it must have been in batches and may not be for the entire stake…