FELDA gains big from Power Root

by **Cals** Mon 12 May 2014, 11:05

Business & Markets 2014

Written by Wei Lynn Tang of theedgemalaysia.com

Monday, 12 May 2014 10:00

KUALA LUMPUR: The steady climb of Power Root Bhd’s share price in the past two years has augured well for Koperasi Permodalan FELDA Malaysia Bhd (Felda), which has been gradually trimming its shareholding.

Last week, Felda ceased to be a substantial shareholder of Power Root, following its disposal of eight million shares in the open market. It currently holds a 7.56% stake or 22.89 million shares after a slew of share sales. Felda had a 16.19% stake, or 48.57 million shares in Power Root as at May 31 last year, according to Power Root’s annual report for financial year 2013 (FY13) ended Feb 29.

There was a notable transaction on March 27 where Felda sold off 21.43 million Power Root shares, representing a 7.12% stake. Based on the closing price of RM1.78 on that day, it appears Felda would have raked in RM38.15 million gains from the block of shares.

Felda had been a substantial shareholder of Power Root since 2008. Felda’s stake rose to 20.03% or 60.09 million shares in FY09 and remained the same in FY10, FY11, and FY12. Over a period of five years, Power Root’s share price had risen more than seven times from 20 sen in 2008.It is worth noting that it has been paying regular dividends every year.

For FY13, the company declared a dividend of nine sen per share, translating into a dividend yield of 4.6%. Felda’s entry price was much lower; hence it would have a higher yield.

This article first appeared in The Edge Financial Daily, on May 12, 2014.