Sunday, June 26, 2011

Popular Holdings and its dividends

Popular Holdings announced their full year results on Friday, after trading hours. Its share price closed at $0.16.

Headlines from the business times:"Popular's Q4 net earnings down 74% at $2.2m"
Headlines from the straits times:"Popular's net profit falls to $23.8 million"

What is your feeling when you read the two headlines above? Please comment.

Let us do a bit of calculation here. This is my personal analysis. It does not represent anybody, not even the company.

Only after reading the news in straits times, I found one very important sentence: "The group sold another five units last month." I have been to the actual unit and  each unite were selling at the minimum price of $3+ million. Therefore, the first quarter results should be good news.

After reading the headlines in the business times, I believe novice investors will definitely panic and sell their shares soon. I will definitely stockpile more if the price goes lower.

If you have read further, earnings per share fell to 2.83 cents from 4.53 cents a year ago. This is definitely misleading. The total shares in FY2011 is about 841 million shares while there are only about 691 million shares in FY2010. It looked like the earnings per share has dropped by 37.5% but in actual fact, the earnings has only dropped 23.9% when we look at the profit after tax.

Assuming that you are holding 1 million shares. Your shares actually profited $28,300. If you have bought popular shares at $0.15 per share during recession, then your percentage profit is actually 18.8%. In total the group is giving out 1 cent of dividend per share, in which you will receive $10,000 for FY2011. That is a good 6.7% dividend yield from your investment.

If you have been more diligent, you will see that Popular has been profiting 9 out of 10 years and each year the dividend is really high. You can click on the link that I have provided on the right hand side of this blog, to see the summary that I have compiled.

One more thing to look at. Although profit has dropped but the net asset value is increased by another 5.7% from 21.45 cents to 22.68 cents. Friday's closing price of 16 cents is actually a discount of 29.5%.

This post is only my personal view on the stock. Whether it's a good stock to own, it still depends on your own judgement.

Cheers and happy investing.

Disclosure: I own Popular Holdings shares at time of post.

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