Thursday, April 07, 2011

Show Me the Money

Asia Enterprise Holdings hit an intra day high of S$0.375 as excitement returned to the oil and gas sector. Despite its cash laden balance sheet, the stock closed at S$0.34, below its NAV. Our other recent name Selangor Properties also advanced to RM4.36 from RM4.20 as regional investors take note of the steep discount to NAV of RM5.11. Looking at how the counter is stirring, more upside could be in store.

Innotek which was flagged out a year ago at S$0.50 surged too. It closed at S$0.615. Note that management has consistently doled out a 5 cent per share dividend annually. Hence, it represents a capital gain of 23%. Given its 10% yield on cost, the total return over this 1 year holding period is approximately 33%. If Innotek maintains its cash horde and does not deploy into acquisitions, the current 8% yield is sustainable. Even at S$0.615 per share, it trades at a steep 28% discount to NAV (S$0.85). The upcoming annual general meeting would be held on 28 Apr 2011, where the dividend is likely to be ratified for a pay out in late May 2011. Expect shareholder approval for this sizable payout to bring about further interest in the name.



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