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Concessions are not affected by change in gov - only delays in rate hikes, e.g. toll hike (gov compensated Tali) & SWM rate revision. We had 5 different PMs from 2018-2022: no change. Concessions: water (extended 2022, expire 2036), highways (started 2007 & 2014, expire 2032 & 2045), SWM (expire 2033).
No buyback because they're already tight on cash and have to reduce dividends. Family not acquiring probably because LGB already owns 49.95% and risk triggering an MGO. Funds not buying because they can't wait for FY27. Retail probably not chasing because everyone's waiting for a lower price since the big seller is still selling. But obviously somebody saw value - that's why we saw that big off market trade in the last sell-down.
The price drop is again due to one big seller exiting - a fund has to show ROI and can't "wait" for FY27 like retail investors can. Your decision is simple... if you believe the dividend can go back up to 3 or 4 sen a year after Rasau, then the current price of 0.315 will give you a future dividend yield of 9.5% to 12.7%.
Actually, risk is low - water usage, highway usage and waste is more or less stable, regardless of economic conditions. Their solar farm income is fixed. FY25 FCF is 4.14 sen, which can comfortably cover the dividend. Once Rasau completes, FCF goes up and dividend should go back up - unless they take on another project. All you have to do is wait until Q2 FY27 (provided no more delays). The unknowns are increased energy cost, wage increase, EPF for foreigners and SWM rate revision.
Watch the announcements for shareholding change, if it's a major shareholder. Yesterday 10M shares done at 0.35 in a negotiated trade. This morning another 10M shares done at a higher price of 0.355.
11M shares transacted today - the bulk from a negotiated trade at 4:50pm and at the higher 0.35 price. Hopefully that's the big institutional seller offloading their remaining shares to a big buyer, which will mean the end of the current downtrend. Let's see tomorrow if the selling stops and daily volume drops significantly.
At 0.10, the TTM P/E will be 2.5x, and dividend yield 22.5%. P/B is 0.28. Unless there's accounting fraud or their concession contracts got terminated, do you think it's possible?
The 7.8% dividend is dependent on the discount between price and NAV maintaining until the next QR. Price is currently depressed because of CoL selling and NAV surged because the semicon/AI names (Dufu, KGB, SAM, Unisem) are near their 52-wk high. Once either (or both) of this change, the discount will narrow and DY will fall.
@Andreew Agreed, but maybe Astro is not a good example because their business model is fundamentally broken - Genting is a better example :) But unlike them, Taliworks is mainly a concession business - their revenue is almost guaranteed. FY25 earnings was the highest since 2018 and they're still paying 5% DY, so it doesn't make sense that the share price is so low.
