Soaring Apollo and Falling Star

 

Soaring Apollo

and Falling Star

How fortunes have fallen in contrasting ways for the long term shareholders of both Apollo Food Holdings Berhad and Star Publications (M) Bhd in recent times.

Although both companies continue to report profits year after year and dishing our dividends to shareholders year after year, the direction of both the companies’ share price continue to move in different directions especially this year.

Apollo soaring into the orbit

Thanks to a continuous improvement in profits, Apollo has seen its share price doubling from RM2.40 plus in 2006 to RM4.80 plus in 2013. That is a 100% increase in its share price. Apart from its reliable dividends payouts, its cash holdings is also up to RM64 million according to its 2013 Annual Report.

Apollo registered a turnover of RM222.75 million for the financial year ended 30 April 2013, an increase of 11.07% as compared to RM200.55 million in 2012. This was mainly due to the improvement of demand in both export and domestic markets.

The profit after tax increased by 47% to RM32.08 million from RM21.74 million as recorded in the previous financial year. Similarly earning per share also increased from 27.18 sen to 40.10 sen over the same period. The higher revenue and improved cost structure had contributed to the higher profit.

Apollo’s 1st Qtr for financial year April 2014 is the strongest compared to all its previous’ quarter earnings. It reported a impressive net profit of RM10,713 Million. Earning per share stood at a high of 13.39 sen, the highest quarter ever recorded. Annualised and that would be a record earning per share of 53 sen. For that kind of earnings, long term investors can happily expect at least a minimum dividend of 25 sen to a most probably 30 sen dividend for financial year 2014.

As Apollo will be paying out a 25 sen dividend for financial year 2013 on January 9th 2014 (ex-date is December 10th 2013), any investor willing to buy now and hold on the stock to until at least the next ex-date in December 2014 (for its at least a minimum dividend of 25 sen to a most probably 30 sen dividend for financial year 2014 again most probably payable around January 2015), that investor would be receiving at least a total of a 50 sen to 55 sen dividend for a holding period of 15 months.

That is a more than 10% dividend return

for an investment of around RM4,800.00

for a 1,000 Apollo shares in 15 months!

As I have posted in the chat-box column of the website of www.stocks-unleashed.com before with this simple sentence : Children love the tasty and delicious food produced by Apollo Food Holdings Berhad, but long term shareholders love the consistent good dividends and its ever appreciating share price even more.

How more true could the above sentence be?

The Star is falling from the sky

The Star is an English-language, tabloid-format newspaper in Malaysia. It is the largest English newspaper in terms of circulation in Malaysia, according to the Audit Bureau of Circulations. It has a daily circulation of between 290,000 to 300,000

The Star is owned by the Malaysian Chinese Association.

The Star (daily) and Sunday Star are published in five editions - two editions which cover the northern peninsular states of Penang, Kedah, Perlis, Kelantan and northern Perak, while another two editions cover the rest of the country. The newspaper has a separate Sarawak edition.

The Star has fallen from the sky which it used to stay for up there steadily for the last decade. It has not yet fallen into the ground as its share price has dropped to a ten year low of RM2.40 in 2013 from its average steady price of RM3.40 during the last decade. That is a fall of only 30% drop in its share price.

The Star is holding on steadily at around RM2.40 as it is still making profit and paying our regular dividends, except that it is earning less profits and paying out less dividends.

Its latest interim dividend of 6 sen for financial year 2013 is lower compared to its previous interim dividend of 9 sen due to its weaker earnings. That is the first time The Star has paid out a lower dividend as compared to all its usual previous interim dividend payout.

Having paid out the interim dividend of 6 sen, the final dividend of another 6 sen is most likely judging by the company’s earning per share of 7.4 sen for the first half of 2013.

The Star has been embarking on several measures to boast up its circulations and advertising revenue. If you are a keen observer of The Star, you would have noticed that it is opening up its advertising to more flexible ways to suit advertisers’ demands. For example, The Star has recently allowed advertisers to advertise its products in a “wrapping style” that cover the first, second and the last third and fourth page. That must have cost the advertiser some big money. Only the big boys (big companies with deep pockets) could only afford this type of advertisements.

Another way The Star is trying to increase its revenue is by offering spot colour and full colour in its obituary section. And really, I did see some of those advertisements in full colour. Even those congratulations advertisements are being offered in spot and full colour.  The Star’s Annual Report also featured several pages of advertisements, too. Guess there is always rooms for extra revenues.

You can bet that The Star would be fighting tooth and nail all the way to make the company more efficient and transform it into a higher-performing and lean organization.

Again, nothing is more serious than a memo signed by its Acting Group CEO Datuk Seri Wong Chun Wai. The memo confirmed that The Star will be embarking on a Voluntary Separation Scheme (VSS) for the first time in its history. The VSS will only be offered to staff from Star Publications and not including its subsidiaries. The VSS will likely take place before the end of the year.

Perhaps the last sentence of the memo summed it up: “The Star continues to be a stronghold in the media industry but to stay that way, we must step up our game. Only then can we remain leaders in our field.”

The writer remains confident that The Star will not fall to the ground, but will somehow remains somewhere in the sky, perhaps not too far from Earth.

Will it or Will it not

or When Will it?

Take a guess about the above sentence of Will it or Will it not or When Will it? Which stock am I referring to? I am talking about a stock which its directors are being “criticized”  for their stinginess in sharing their big cash hoard with its minorities shareholders.

Yes, I am referring to the expected “Bumper Dividend” from Keck Seng (M) Bhd which should be declared before the end of the year.  Time is running out for the board of directors of Keck Seng to decide.

Judging from its very strong share price runs during the last few days, I believe many investors are betting ahead of its “Bumper Dividend” announcement due anytime. And if it really happens, I strongly believe that there could a knee-jerk reaction of at least a 50 sen rise from its current share price of around RM6 plus.

Then again, it might not happen as in life, we should always expect the unexpected.

Before I sign off, I like to share this comment taken from http://klse.i3investor.com. The interesting comment by “prudentinvestor” reads : It is not the end of the world even if Keck Seng fails to pay the special dividend that every small share holder is expecting. The directors are only thinking of themselves. While many small investors are able to claim back a portion or all of the 25% tax that has been deducted, the directors may not be able to do this. The happiest people if Keck Seng does not make full use of the 108 balance would be those from the Lembaga Hasil Dalam Negeri.