Thursday, December 12, 2013

Perstima - maintain generous dividend payouts

In the past three years prior to Nov 2013, it has seen its earnings decline as margins weakened due to increased competition from an influx of cheap tinplate imports. However its most recent results show a major operation turnaround following a change in management earlier in 2013.

The significant recover in margins, and hence stronger earnings, should help sustain its annual dividend payout of 40 sen per share.

The much higher margins are thanks to the efforts of Perstima’s new MD who managed to slash costs and boost efficiency.

In Oct 2013, it declared a 20 sen per share interim dividend, which means that it is well on track to pay its annual total dividend of 40 sen per share.

Its net cash as at Sept 2013 translates into 74.6 sen per share, it looks to have the balance sheet strength to maintain its generous dividend payouts.

Historically, it has maintained a 40 sen per share annual dividend even when its earnings fell a peak of 78 sen per share in FY2010 to only 27 sen per share in FY2013.

It is worth noting that the competition from cheap tinplate imports from China and South Korea is still prevalent. At this stage, it has only addressed its production efficiency and costs. If the oversupply of tinplate eases of if strict anti dumping measures are imposed, its earnings could take another leap.

It has been petitioning the MITI to take anti dumping measures against the import of tinplate. However downstream players under the MTCMA that use tinplate to manufacture food storage products are lobbying against Perstima, which has a virtual monopoly on locally produced tinplate.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.