Following the announcement of a special dividend the company will be left with a fund management arm and hire purchase leasing operation that collectively generated a net profit of less than rm15 million.
To recap, PacificMas announced that it was rewarding shareholders with a proposed total dividend of rm1.698 per share comprising an interim dividend of rm1.398 per share gross (of rm1.0485 net per share) and a single tier dividend of 30 sen per share tax exempt. In all, shareholders will receive a net dividend of rm1.349.
It should be noted that the dividends are one off and will not be repeated. The dividends are from the sale of PacificMas’s insurance arm. The Pacific Insurance Bhd which was completed and profits from the sale had already been fully reflected in its books for Dec FY2010. The sale of rm216.48 yielded a gain of rm72.34 million for PacificMas in FY2010.
Its net assets per share stood at rm3.83 as at Dec 31, 2010. This already included the sale of PacificMas Insurance. With a net of tax dividend payout of rm1.349 per share and 170.994 million shares issued, it implies a total payout of rm230.6 million, which will reduce the net assets per share to rm2.48.
Once PacificMas’ shares trade ex for dividends, its share price should be adjusted by the amount of gross dividends declared. With a residual net assets per share of rm2.482. the stock would be trading at relatively high price to book of 1.65 times for a company that will essentially left with a fund management arm, Pacific Mutual and PacLesase Sdn Bhd. The combined net profit of rm13.59 million versus a market cap of rm700 million implies a historical price to earnings multiple of 51.5 times.
OCBC owns 67.07% in PacificMas. Market observers do not preclude the possibility of future corporate developments involving PacificMas if OCBC group decides to list some of its Malaysian assets.
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