Gearing drops, share price up. RM480 million sale.

Companies with more cash and less debts are always loved by the market. Selangor Dredging Berhad (SDB) decided to sell its office building Wisma Selangor Dredging and land on Jalan Ampang, Kuala Lumpur, to Golden Eagle Realty Sdn Bhd for RM480 million. Full news article in thesundaily here. More good news? The price is 20.9 percent above its market value and 50.9 percent premium to its net book value as at March 31 2016. (Yes, this is a huge premium or in other words, a big gain when SDB sells it)  In the filing to BURSA, this was what SDB stated, “The proposed disposal provides an opportunity for the SDB Group to unlock its investment in Wisma Selangor Dredging and generate immediate cash flow for the SDB Group.” (Positive statement lah. If we have gained, should just sell, take the money and invest somewhere else. Provided we already sort of have some targets of where to invest.)

Most of the proceeds will be used to be used to settle a redemption sum owed to Public Bank and RM80.96 million will go to shareholders via a special cash dividend. Many would want this I guess, which was why its share price suddenly shot up. Full news article about it in TheEdgeMarkets here. We can now buy one unit of its stock at RM1.08 If we had bought earlier, we would have saved 12 sen per unit. 🙂   By the way, based on some movement of the share price movement, the highest point reached was RM1.16 within the past 4 weeks. At one point within past 52 weeks, it was as low as RM0.785 per unit. If interested to find out more, here’s the link to i3investor.com In terms of coverage by analysts, this stock is not one of those super popular ones. Well, some of its latest projects include this one opposite the Sunway Velocity Mall. UNA by SDB  If your preference is for SOVO instead, there’s one which is right next to a MRT station. SQWHERE in Sungai Buloh. 

On an overall basis, the property actually contribute RM14.56 million for the financial year ended March 31. While SDB will lose this rental portion, it will also be saving RM13.40 million of bank interest once it is sold. Current times are nowhere near bullish but the sale comes with gains which meant that SDB can use the proceeds to buy something else. It’s easier to get a good deal now too. I do not own any SDB’s shares but their gearing would drop to just 0.05x after this. (Yes, this kind of gearing is quite unheard of for property developers. Not even the big names.). Happy following.

written on 21 June 2017

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