Kegalle Plantation PLC- Corporate Announcement Update

Melissa Pereira Tue Jul 14, 2015 9:56 am

Kegalle Plantations PLC made a dividend announcement of LKR 45 per share on 10th July 2015. The scale of dividend payout will have material implications on the company’s Financials and investment perspective. The dividend payout will result in company paying out LKR 1.1 billion to its equity owners. It amounts to 31% of Total Equity, 45% of Cash plus S/T Investments, and 5 times of annual PAT (2014/15) for the group.

KGAL is trading at book value subsequent to the dividend announcement and we estimate ex-dividend price correction to be in par with dilution of net assets of the company. Accordingly for investment perspective we estimate a price of LKR 96 at ex-div. LOLC SEC derives an Ex-dividend valuation of LKR 82.00 for KGAL considering the prevailing plantation outlook and the impact of dividend payout. Therefore the valuation will be at a 16% discount to potential ex-div price. Accordingly we revise down LOLC SEC recommendation from Hold to Sell, despite the high dividend return for the investor.

Please refer the link for more details- https://drive.google.com/file/d/0B6oYIOgoj7LDQk9GdTYxRzBHRzA/view?usp=sharing