UOA Dev announced a dividend reinvestment scheme. This scheme allows shareholders to reinvest div income at lower price at max 10% discount of 5-day weighted average price prior to price fixing.
Background info:
- listed in June 2011 at RM2.90.
- Hit low RM1.20 losing 50% within 3 months in Sep 2011
- it explained that investment community is rejecting this "good stock"
- many reasons quoted to explain the poor performance of this stock include:
1. Single location play - UOA Bangsar
2. Property is cyclical play
3. Share overhang
Comments on Scheme:
- This type of scheme is only beneficial for long term play. Eg - Maybank case - "monopolistic" and ever green kind of business
- UOADev stuck in cyclical property business also strained by highly land cost (as land price and prime area keep going up), market sentiment and highly competitive business environment.
- with the recent upsurge in property market, the emergence of new developers mushrooming taking advantage of high property price.
- UOADev is having good cash flow now due to robust sales achieved - hence good dividend payout
- Knowing the characteristics of UOADev, the purpose of investment is taking into consideration of 1. depressed valuation 2. good cash flow during property boom 3. expectation of distribution of excess cash flows as dividend.
- Hence, in long term view, you should take the cash dividend instead of the scheme.
BUT
- Technical wise, the chart culminating as perfect symmetrical triangle for the last 6 months after a drop of 50%
- this signify a significant support/accumulation level at the moment that may be completed soon.
- knowing the 10% dividend per share translates into 6% to 7% yield, paying out in June/July 2012, it should be some interests on this stock for the next 2 - 3 months.
Background info:
- listed in June 2011 at RM2.90.
- Hit low RM1.20 losing 50% within 3 months in Sep 2011
- it explained that investment community is rejecting this "good stock"
- many reasons quoted to explain the poor performance of this stock include:
1. Single location play - UOA Bangsar
2. Property is cyclical play
3. Share overhang
Comments on Scheme:
- This type of scheme is only beneficial for long term play. Eg - Maybank case - "monopolistic" and ever green kind of business
- UOADev stuck in cyclical property business also strained by highly land cost (as land price and prime area keep going up), market sentiment and highly competitive business environment.
- with the recent upsurge in property market, the emergence of new developers mushrooming taking advantage of high property price.
- UOADev is having good cash flow now due to robust sales achieved - hence good dividend payout
- Knowing the characteristics of UOADev, the purpose of investment is taking into consideration of 1. depressed valuation 2. good cash flow during property boom 3. expectation of distribution of excess cash flows as dividend.
- Hence, in long term view, you should take the cash dividend instead of the scheme.
BUT
- Technical wise, the chart culminating as perfect symmetrical triangle for the last 6 months after a drop of 50%
- this signify a significant support/accumulation level at the moment that may be completed soon.
- knowing the 10% dividend per share translates into 6% to 7% yield, paying out in June/July 2012, it should be some interests on this stock for the next 2 - 3 months.
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