Popular Holdings

[KopiKat]

If I'm right about Old Man's cash flow problem, I have a perfect solution for him. For FY12, declared a Special Dividend = 4ct + Final Dividend = 0.7ct. That works out to be $39.5M. Old Man's share of dividend will be close to $20M and this ought to free up any Gearing / Covenant issues with his bankers (assuming his Hldg Co. borrowed substantially to subscribe for the 2 Rights Issues). On the Popular Hldgs side, the Cash will reduce to ~ $90M, which is about the same level as after the 2nd Rights Issues in Apr-10 Financials. Everybody Happy! Old Man, Shareholders, Banker,... and Popular Hldgs Balance Sheet still remain healthy. Can work? Old Man, any comments?

[karlmarx]

hmm i'm not so sure about this. what would be the business rationale for a special dividend? profits are good but there were no exceptional gains from any huge divestment. moreover, i believe the cash hoard was meant to support their property development business, in an unfortunate event of a downturn. whether they need that much cash for their property development business, i'm not sure. afterall, the working capital requirement of their retail and publishing business is much lower. but having lots of cash does provide for opportunistic purchases, if there was one.

their recent decision to incorporate a cafe into their bookstores shows they're still keen to maintain, grow, and perhaps evolve their business according to the changing market needs. it is a positive move; they are not grasping at straws.

i value popular as three separate assets; 1) it's retail and publishing business, 2) property development, and 3) cash hoard. the real gem of the company is in no.1, which could be sold for around a PE of 10; a high premium to book value (if we had a separate b/s for its retail and publishing business). they have negligible experience and expertise in no.2, so it could only be sold for close to book value.

who knows what's going to allow the share price to be fully valued one day. it's not the best business, but it sure is darn value for money.

[KopiKat]

hmm i'm not so sure about this. what would be the business rationale for a special dividend? profits are good but there were no exceptional gains from any huge divestment.

Ok, ok, I got my accountants (one unqualified 'KopiKat') to work OT to look at Old Man's cash flow in more detail. We looked at his cash inflow from dividends collected,

1) 1H12 (Apr) @ 0.5ct : $2.3M
2) FY11 (Nov) @ 1.0ct : $4.6M
3) 2H10 (Apr) @ 0.2ct : $0.94M
4) 1H10 (Nov) @ 1ct : $3.68M
5) FY09 (Apr) @ 0.7ct : $1.74M

So,
Total Rights = $26.85M
Minus Total Proceeds (Sale of Shares) = $3.55M
Minus Total Dividends = $13.27M
Gives $10M

ie. Old Man has $10M of debts (if he'd borrowed for rights) + Interests incurred.

So, we don't really need a big Special Dividend of 4ct as previously recommended. Instead, we now propose Special Dividend = 1.5ct + Final Dividend = 0.7ct

Old Man's share will be $10.14M, which should make him happy and debt free! Ya, no need to keep selling his beloved Popular Hldgs shares and depress market price!

Total DPS for Popular Hldgs for FY12 = 2.7ct, which is still less than my expected FY12 EPS = 3.4ct for the year. Oh ya, it's the 15th Anniversary of Popular Hldgs as a listed co., so can use that as a good reason for this Special Dividend, hee...

Shareholders also happy as Bigger DPS + Share Price no longer depressed by one previously depressed Old Man (if indeed he has debt issues due to rights issues)!

[propertyinvestor]

Old man bought back 3.173million shares...why so weird? Why sell 3000 shares and buy back 3.1million shares?

[yeokiwi]

Old man bought back 3.173million shares...why so weird? Why sell 3000 shares and buy back 3.1million shares?

old man saw kopikat 's analysis... haha

[KopiKat]

Old man bought back 3.173million shares...why so weird? Why sell 3000 shares and buy back 3.1million shares?

old man saw kopikat 's analysis... haha

He suddenly realised the logic of 'Depressed Old Man Selling to Depress Share Price' is not going to make him richer. Now, he's turned into 'Furious Old Man Buying which Furiously Push Up Share Price'.

To borrow some TA terms, $0.18 (Sell Price on 8-Feb) is no more the Resistance and $0.17741 (Buy Price on 30-Mar) is now the Support.

corydorus Wrote: "tiny cafe within their Popular bookstores starting with one which is located in town area." interesting ideas.
With a bookstore next, will this lower the turnover of customers ?

KopiKat Wrote: If that's what they're planning to do, it's not a new idea. I believe Borders had something similar before they closed shop. Or perhaps they plan to do something with their usually empty CD-Rama section? Like drink coffee can listen to free unlimited music??

I did some search on internet and realised that at Prologue @ Ion Orchard, they actually had a cafe (JAMS Cafe). I went down on Saturday to check it out and guess what? JAMS Cafe was closed for renovation. My guess - it's going to reopen as Epilogue (Selling Premium Coffee + Sandwiches).

BTW, the crowd at Prologue was rather thin for a Saturday afternoon (I compare it with the almost packed Kinokuniya @ Bugis Junction). I doubt that it'll last very long as the rent at Ion is unlikely to be low.

[Mr Nobody]

Up to now, I still can't see the logic of having Prologue in ION. By the way, Prologue is a 'logic' / artificial intelligence programming language.

[KopiKat]

By the way, Prologue is a 'logic' / artificial intelligence programming language.

I think that was Prolog.

From dictionary.com,

Prologue : A preface or introductory part of a discourse, poem, or novel.
Epilogue : A concluding part added to a literary work, as a novel.

That's why I guessed that the new cafe @ Prologue must be Epilogue.

[Mr Nobody]

Haha, you are right. You must be someone in the same field.

[propertyinvestor]

I think oldman buying again today. Why ah?