Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on May 11, 2016.

 

KUALA LUMPUR: Taliworks Corp Bhd, which expects to conclude the acquisition of the Kajang Silk Highway from highway concessionaire Silk Holdings Bhd in a few months’ time, expects to sustain its generous dividend payout in the current financial year ending Dec 31, 2016 (FY16).

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The group declared its highest-ever dividend of eight sen per share in FY15 compared with two sen in FY14. The total dividend payout exceeded its dividend payout ratio of 75% of its net profit, despite it reporting a 71.3% drop in net profit to RM86.58 million due to a one-off gain on its restructuring exercise in FY14.

Taliworks executive director Datuk Ronnie Lim Yew Boon is confident that the group will be able to maintain last year’s proportion of dividend paid to total profits in FY16.

“Barring any unforeseen circumstances and the ability of cash flow [the group has], we will be able to pay good dividends [this year],” Lim told reporters after the group’s annual and extraordinary general meetings (AGM and EGM) yesterday.

Taliworks chief investment officer Kevin Chin Soong Jin said the group also has strong cash flow, which stood at RM160.58 million as at Dec 31, 2015.

He said the group plans to disclose its respective five segments’ earnings before interest, taxes, depreciation and amortisation, and earnings before depreciation and amortisation (Ebda) numbers in its quarterly financial statements starting this year.

“The Ebda number is the net cash flow of the operating segment. We want the public to focus on the net cash flow line because this is how the company should be valued,” Chin added.

Chin said Taliworks is tendering up to RM600 million worth of infrastructure jobs in Malaysia, including several work packages for the Langat 2 water treatment plant in Selangor.

“There is no visibility of these contracts yet. I believe there will be some visibility coming in after the Selangor water industry consolidation is completed,” he added.

On Sept 30 last year, Taliworks was awarded a RM75.87 million contract to build the Hulu Langat balancing reservoir with a 92 million-litre capacity and other ancillary works under a joint venture with LGB Engineering Sdn Bhd in October last year.

For FY16, Chin remains optimistic that the group’s performance will be “encouraging” following the disposal of its loss-making China waste and waste-water management businesses for US$54.6 million (RM221.13 million).

“The disposal of the entire China businesses will relieve Taliworks from imminent commitments to fund substantial foreign currency upgrading capital expenditure and enable the company to redirect the disposal proceeds to other mature business investments as part of its new focus,” he said.

According to Taliworks, the disposal will reduce its gearing to 0.36 times from 0.64 times and will result in a one-off gain of RM62.9 million.

Earlier at the AGM and EGM, Taliworks shareholders voted in favour of the group’s new business strategy, which sees it venturing into the solid waste and public cleansing business via a proposed acquisition of a 35% stake in SWM Environment Holdings Sdn Bhd for RM245 million.

Chin said the stake acquisition is expected to result in immediate earnings accretion to Taliworks as SWM Environment has a mature, profitable and substantial solid waste and public cleansing business in the country.

“It could give immediate visibility to generate a minimum of 6% dividend payout on the purchase consideration of RM245 million without any impact on Taliworks’ gearing,” he added.

Taliworks shares closed three sen or 2.29% higher at its one-month high of RM1.34, with a market value of RM1.62 billion.

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