Golden Land Bhd: Special dividend and capital repayment as catalyst for share price uptrend movement?

Golden Land Bhd (Stock Code:7382) listed on Bursa Malaysia announced on 8 June 2015 that it has signed a conditional sale and purchase agreement to sell 4 of its subsidiaries and a piece of plantation land to a ubsidiary of Felda Global Ventures (Stock Code:5222). Fast forward to March 2016, the sale and purchase is almost nearing its completion stage with the latest announcement in its quarterly report ending 31 Dec 2015 indicating completion of disposal in early March 2016 and receipt of the balance of cash receipt amounting to a total of RM655million.

Yours truly had been collecting Golden Land shares in several trades after the announcement of the deal, with the view that the announcement of the cash distribution will provide a short term catalyst for narrowing of discount of its share price to its intrinsic pure cash value, hence providing a short term risk arbitrage gains.

Based on the latest quarterly financials as at 31 December 2015, intrinsic cash value (A) is determined to be as follows (RM1.87 per share):

 

Note: (B) represents expected cash outlay for purchase of palm oil plantation in Indonesia as announced in its quarterly report.

Based on the current share price of RM1.61 as at 4 March 2016, there is still a 15% discount to its intrinsic cash value, excluding all other fixed assets. The actual NTA is deemed to be higher but had been excluded in the computation.

For those holding on to the Golden Land shares, it may be ripe for harvesting and to take the opportunity to dispose your shares for any gains obtained, since bulk of its income generating palm oil assets will have been fully disposed.

For those that are willing to ride on Golden Land’s shift of focus into growing its Indonesian palm oil plantation operations and smallish property development ventures, the net cash value post distribution may serve as a cash buffer for future operations and should you choose to hold on to the shares.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

 
Disclosure as at time of publication: Long Golden Land Berhad.