FOUNDED nearly a century ago, the Panasonic brand is one of the world’s most recognisable electrical home appliance brands. Japan-listed Panasonic Corporation owns a number of subsidiaries worldwide, including nearly 50% of Panasonic Manufacturing Malaysia Bhd (Panamy), which has an established presence in Malaysia for over 30 years.

While the Panasonic brand is high profile, Panamy is under the radar screen of investors. The company is viewed more of a dividend stock, although earnings are steadily rising.

Historically, Panamy has consistently rewarded its shareholders well — its payout ratio has ranged from 80% to over 100%. Hence, when the company announced lower special dividends of 23 sen in June compared to 35 sen in 2013 and RM1.38 in 2012, its share price took a sharp fall.

The company pays three dividends a year — special, interim and final — which collectively amounted to 69.2 sen in FY March 2014. This translates to a yield of 3.7% based on the current share price of RM18.46.  However, this should not concern investors, given Panamy’s large net cash of RM520 million, which is half its current capitalisation of RM 1.1 billion.

One possible reason for the lower dividend could be the yen, which has slumped to seven year lows on Shinzo Abe’s policies to halt deflation and kickstart the economy. Over the last year, the yen has slumped from 314 to 287 versus the ringgit. It will be more advantageous for Panamy to repatriate dividends when the yen is weaker, thus we could see higher dividends when the yen stabilises.

Panamy’s earnings have been steadily growing. Between FY 2010 and 2014, turnover rose a compounded 7.2% per annum while net profit grew 5.6% annually. The stock is also attractively priced, with a 12-month trailing P/E of 12.8 times and at 1.6 times book.

This article first appeared in The Edge Financial Daily, on December 5, 2014.