From Thomson Reuters:
" Duty Free International Limited is a Singapore-based investment holding company. The Company and its subsidiaries are engaged in duty free trading. The Company's segments include Trading of duty free goods and non-dutiable merchandise, which focuses on sale of goods, and Investment holding and others, which focuses on sale of oil palm fruit bunches. The Company offers The Zon, which is a travel retail brand. The Company operates over 30 duty-free retail outlets or complexes and trading outlets located at various locations throughout Peninsular Malaysia, including Johor Bahru, Bukit Kayu Hitam, Kuala Lumpur International Airport, Penang International Airport, Padang Besar and Langkawi. The Company owns the Black Forest Golf and Country Club and an oil palm plantation. The Company's 18-hole Golf and Country Club and oil palm plantation assets are located near the Malaysia-Thailand border at Bukit Kayu Hitam, and have a combined land mass of over 700 acres. "
Investment Merit:
1) Consistent dividend. Since the RTO in May 2011, Duty Free Int ( DFI ) has paid out a total of $0.144 in the last 6 years, at this point of writing ( 12th Dec 2017 of 27cts ), 53.3% yield or 8.89% on a annualised basis. I believe the dividend will be sustainable moving forward, as there is only a RM$1 million long term debt.
2) Potential money raised from exercise of warrants: There are 477 million of bonus warrants of exercise price at S$0.43. Should all the warrants be exercised, about $205 million will be raised. At current price of 27cts, no one will exercise. Its recent high was 44cts in April 2017.
3) Cash position of RM$279 million as of 2QFY2018. This may allow DFI to acquire business to complement its existing business.
4) Net margin is high at ave 10.9% for FY 2013 to FY 2017.
5) Trading at trailing PE of 13.5x PE. Its highest valuation was 22x PE, when it is trading at 44cts.
Risks:
1) Weakening of Ringgit is a concern. Since 2013 of S$1 : RM$2.50, Ringgit has weakened to S$1:RM$3.03.
2) Implementation of GST has impacted the sales at Duty Free.
Conclusion:
I believe there is a bargain at 27cts, given its historical generous dividend payout and recent drop in share price from 44cts in April 2017 to 23.5cts in Dec 2017.
" Duty Free International Limited is a Singapore-based investment holding company. The Company and its subsidiaries are engaged in duty free trading. The Company's segments include Trading of duty free goods and non-dutiable merchandise, which focuses on sale of goods, and Investment holding and others, which focuses on sale of oil palm fruit bunches. The Company offers The Zon, which is a travel retail brand. The Company operates over 30 duty-free retail outlets or complexes and trading outlets located at various locations throughout Peninsular Malaysia, including Johor Bahru, Bukit Kayu Hitam, Kuala Lumpur International Airport, Penang International Airport, Padang Besar and Langkawi. The Company owns the Black Forest Golf and Country Club and an oil palm plantation. The Company's 18-hole Golf and Country Club and oil palm plantation assets are located near the Malaysia-Thailand border at Bukit Kayu Hitam, and have a combined land mass of over 700 acres. "
Investment Merit:
1) Consistent dividend. Since the RTO in May 2011, Duty Free Int ( DFI ) has paid out a total of $0.144 in the last 6 years, at this point of writing ( 12th Dec 2017 of 27cts ), 53.3% yield or 8.89% on a annualised basis. I believe the dividend will be sustainable moving forward, as there is only a RM$1 million long term debt.
2) Potential money raised from exercise of warrants: There are 477 million of bonus warrants of exercise price at S$0.43. Should all the warrants be exercised, about $205 million will be raised. At current price of 27cts, no one will exercise. Its recent high was 44cts in April 2017.
3) Cash position of RM$279 million as of 2QFY2018. This may allow DFI to acquire business to complement its existing business.
4) Net margin is high at ave 10.9% for FY 2013 to FY 2017.
5) Trading at trailing PE of 13.5x PE. Its highest valuation was 22x PE, when it is trading at 44cts.
Risks:
1) Weakening of Ringgit is a concern. Since 2013 of S$1 : RM$2.50, Ringgit has weakened to S$1:RM$3.03.
2) Implementation of GST has impacted the sales at Duty Free.
Conclusion:
I believe there is a bargain at 27cts, given its historical generous dividend payout and recent drop in share price from 44cts in April 2017 to 23.5cts in Dec 2017.
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