HENGYUAN (4324) - (richDad): HENGYUAN - 3 Charts on Balance Sheet means DIVIDEND SOON?




INTRODUCTION:
Balance sheet is an important things to check a Company's health status. High net profit must be accompanied by higher cash and better still lower debts. I did my balance sheet test on HENGYUAN and I believe that you guys should look at these 3 charts.

CHART 1: CASH HAS INCREASED IN THE PAST 2 YEARS




CHART 2: BORROWINGS HAS DECLINED IN THE PAST 2 YEARS



CHART 3: AS A RESULT, NET GEARING HAS DECLINED


CONCLUSION: DIVIDEND SOON...
With improved cash level and lower borrowings, HENGYUAN should announce dividend by end February. Assuming that the dividend is really announced, its PE is likely to increase to at least 8x.

From the current 5x to 8x PE, we are talking about 60% upside...
PE at 5x = RM3.33 * 5 = RM16.65 (about the current level)
PE at 8x = RM3.33 * 8 = RM26.64 (if the dividend is announced with at least 10% payout at 33 sen)
I still maintain my Target Price of RM20 by using 6x PE as I am waiting for the dividend to be announced.
All in, looking at the upside and downside, I choose to keep HENGYUAN as there is high chance it will announce dividend.


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