Insider Asia’s Stock Pick: Tasek Corporation

by **Cals** Wed 12 Nov 2014, 03:00

Insider Asia’s Stock Pick: Tasek Corporation

By InsiderAsia / InsiderAsia | November 11, 2014 : 12:11 PM MYT

Tasek Corporation Bhd
With real interest rates on the decline — what with rising inflation and stagnant bank deposit rates — investors may want to consider high-yielding stocks to boost returns on their monies. Notably, for those who are averse to risks, share prices for high-yielding stocks are generally less volatile.

One such stock is Tasek Corporation Berhad ([You must be registered and logged in to see this image.] Financial Dashboard), an Ipoh-based cement manufacturer. The company enjoys high levels of operational efficiency and profitability — and rewards shareholders with rising dividends.

In 2011 and 2012, Tasek paid dividends totalling 75 sen and 90 sen per share (inclusive of special dividends), respectively. Last year saw dividends increased to RM 1.44 per share, which translates to a decent yield of 8.4% based on most recent price of RM 17.12.

This is significantly higher than prevailing bank FD rates, which are hovering around 3.3% for a one-year tenure.

Tasek has been returning cash to shareholders through special dividends — 37.5 sen, 45 sen and 60 sen was paid in 2011-2013. Most recently, the company declared a 50 sen per share special dividend in conjunction with its 50th anniversary. The stock goes ex-entitlement on 17 November 2014.

Despite a challenging environment for the cement industry, Tasek has fared well through the years, generating consistent earnings, if not strong growth. It has maintained relatively high margins.

Revenue for the 9M2014 totalled RM483.1 million, already 83.7% of 2013’s full-year earnings. Net profit for the 9-month period was RM77.5 million, or 82.5% of 2013’s full-year profit.

Given its stable operating cashflow and strong balance sheet — net cash totalling RM336.1 million as at 30 Sept 2014 — Tasek should be able to maintain a high dividend payout to shareholders.

TheEdge Research rates Tasek a 2.7 out of 3.0 on fundamentals and 2.1 out of 3.0 on valuation.

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[size=14]This article first appeared in The Edge Financial Daily, on November 11, 2014. [/size]