ROI on Yi-Lai: Part IV

How now for Yi-Lai?

Do you reckon that there is enough justifications for one to continue to hold on to Yi-Lai?

Oh, before you answer that, I am afraid that there is perhaps another issue that needs to be considered.

The dividend issue. ( Click here for Yi-Lai historical dividends. )

From that site, Yi-Lai paid a gross dividend of 6 sen for its fy 2002, 13.5 sen sen for fy 2003 and 21 sen for its fy 2004.

What a cash cow! Awesome isn't it?

Now there's a problem.. a concern... so far fy 2005, Yi-Lai has only paid 7 sen. Another 8 sen dividend was announced and is pending... which means for fy 2005, Yi-Lai would only pay a gross dividend of 15 sen.

A gross dividend of 15 sen per share for Yi-Lai is still pretty impressive but it pales in comparison to what Yi-Lai paid last year.

How?

Drop in dividends wor!

How?

Is this acceptable or not?

What say you?

Do you reckon that there is enough justifications for one to continue to hold on to Yi-Lai?

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Btw... for those interested... hhc had drawn up a pretty good pro and cons comparison for Yi-Lai...

But i think it will make more sense if we make apple to apple comparison. If u see what the other tile makers are doing, u will agree that Yilai is the best company to invest in.

Some Pro for Yilai:

1. High N. profit margin ~24~20% (Wthorse from 21% drops to 7& last Q)
2. Revenue is still consistent.
3. Trailing PE is still 7X compared to Wthorse 8X (it suffered huge drop in earning in LASt Q)
4. Cash hoard around 48M (30 sen per share)
5. No ESOS
6. Management is still honest and no funny expansion or diversification.
7. High ROE (~15%)
8. High profit yield ~15%. Meaning that if u buy the company at RM1.2, theoritically it is making around RM0.17 per share in a year. Much better than building your own factory, i think,

Bad things

1. Lembaga tabung haji is selling its share
2. Major shareholder (taiwainese) is selling.
3. COnstruction and property section is not in good shape. (yilai does export to Spore HDB, so not that bad).
4. Cash hoarding is depleting so that cannot expected bumper dividen like last year (~0.21 per share).
5. Not v liquid
6. Low market cap which bar certain fund from investing in it (RM192 M only).