Major re-rating catalyst from potential bumper dividend by FY13. Potential M&A target with 83% of market cap in liquid asset (RM1.90/share net cash, RM1.32/share investment). Deep value from Johor land bank with significant upside potential. Fair value of RM6.00, based on 30% discount to RM8.50 SOPderived valuationBased on the amount stated in 2011 annual report whereby the company has RM358.506m to pay as franked dividend, and after deducting the 4% interim dividend declared in Aug 2012, the company has about RM344m balance to pay as franked dividend out of its retained earnings. The transitional period of 6 years to allow companies to pay franked dividends to their shareholders expires in 31 December 2013.
IF Kseng chooses to clear all its 108 balance of the Income Tax Act, 1967, and outstanding shares of 361.5m, investors could expect a hefty dividend payout in 2013.