Hock Lian Seng

[ksir]

To those who collected the humongous 12.5c/share dividends for FY2016, are they better off today if they were to hold on to their shares till now? The answer is an obvious NO.

Let’s add up all the dividends declared from FY17 to FY22, and it totalled $0.073.

HLS shares was trading above $0.50c in 2016 when they declared the special + ordinary dividends of $0.125. It seems that anyone who bought in then will get an instant return in excess of 25% from the dividends. However, after XD, and follow by subsequent years of low return, it is trading at around $0.25c/share now, which means a 2016 investor would have lost a minimum of 50%, or $0.25c per share. Less off the dividends received from FY2017 to FY2022, which is $0.073, a 2016 investor is still very much in an overall loss position.

However, I personally think this is an okay company conservatively and carefully run by the management. I feel that they are quite careful in their bidding for new contract to make sure the projects will offer a certain level of margin. This is probably why they don’t win as many contracts as other civic engineering companies. This is also probably why they can build up a sizeable cash hoard after the large pay-out in 2017.

Those buying at over S$0.5, likely jumped in due to the humongous dividend. Before announcement it was generally trading at below S$0.35.
If one bought at high Price with about the same average Earning (hence high PE), they are just looking for trouble. Haha. This is not great business with sustainable super high ROE and moat that you can buy at high PE and still get great return!