Tasek Corporation Bhd
Tasek Corporation Bhd is an Ipoh-based cement manufacturer with an annual capacity of 2.3 million tonnes. The company enjoys high levels of operational efficiency and profitability, and rewards shareholders with decent dividends.  

Despite occasional challenges for the cement industry, Tasek has managed to chalk up consistently stable earnings and high margins throughout the years. Net profit for 1H2014 rose 28.7% y-o-y to RM56 million. Notably the 1H2014 results include the impact of sharply higher electricity tariffs since Jan 2014.

From a valuation perspective, Tasek is trading at a 12-month trailing P/E of 18.4 times and price-to-book ratio of 2.3 times. This is much lower than its main competitor LaFarge Malaysia Bhd, which is trading on a trailing 12-month P/E of 21.2 and at 2.7 times book.

Tasek also offers a better dividend yield for investors. The company has been consistently paying out high dividends for the past three years, averaging RM1.03 per share per year. The total dividend paid in 2013 is RM1.52, or a yield of 9.4% at the current price of RM16.20. It should be noted that the dividend payout exceeded earnings, although it can be easily funded from cash reserves. On the other hand, LaFarge only paid out RM0.41 in 2013 or a 4.1% yield at current price of RM10.00.

Given its stable performance and strong balance sheet with net cash of RM361 million, Tasek should be able to continue paying high dividends to shareholders.

Demand for cement should remain form in the near term as more infrastructure projects take off.

This article first appeared in The Edge Financial Daily, on October 17, 2014.