Wednesday, October 9, 2013

TEE International: Scrip dividend scheme in place (OCBC)

TEE International:
Fair value S$0.38
add: 12m dividend forecast S$0.025
versus: Current price S$0.365

Scrip dividend scheme in place
• Scrip dividend scheme applies to FY13 div
• MOU to acquire M&E business in HK
• Unchanged S$0.38 FV

Tee International announced that its scrip dividend scheme will apply to the final tax-exempt (one-tier) dividend of 2.5 S-cents per ordinary share for the financial year ended 31 May 2013.
Management updates that the price for the new shares issued under the scheme will be set at not more than a 10% discount, nor shall it exceed the average of the last traded prices for the period between 9 Oct 2013 and 11 Oct 2013 (both dates included). We believe this scrip dividend scheme allows shareholders who are looking to re-invest dividends into the counter to do so conveniently, and also enable the group to retain such capital for allocation into future opportunities. While we hold our fair value estimate of S$0.38 per share unchanged, we are upgrading our rating to a BUY (from hold previously) on valuation grounds as the share price has weakened marginally from our last update. (Eli Lee)

Scrip dividend scheme applicable to 2.5 S-cent dividend for FY13
Tee International (Tee) announced that its scrip dividend scheme will apply to the final tax-exempt (one-tier) dividend of 2.5 S-cents per ordinary share for the financial year ended 31 May 2013. Management updates that the price for the new shares issued under the scheme will be set at not more than a 10% discount, nor shall it exceed the average of the last traded prices for the period between 9 Oct 2013 and 11 Oct 2013 (both dates included). Note that 9 Oct 2013 is the ex-date for the dividend. We believe this scrip dividend scheme allows shareholders who are looking to re-invest dividends into the counter to do so conveniently, and also enable the group to retain such capital for allocation into future opportunities.

Signed MOU to possibly acquire >60% in Meco Engineering Ltd
The group also announced that it had signed a Memorandum of Understanding (MOU) to explore acquiring a minimum 60% stake in Meco Engineering Ltd, which is a private mechanical and electrical company based in Hong Kong. The acquisition is expected to strengthen Tee’s presence in Hong Kong and Macau and support the group in bidding and delivering “high value, large scale and complex engineering projects.” We believe this acquisition could help Tee in replenishing its Engineering segment order book ahead (S$215.4m as at end May 2013) but would look for further updates before any potential impact can be assessed.

Unchanged fair value estimate of S$0.38
While we hold our fair value estimate of S$0.38 per share unchanged, we are upgrading our rating to a BUY (from hold previously) on valuation grounds as the share price has weakened marginally from our last update. Given a fairly attractive dividend of 2.50 S-cents ahead, which translates to a yield of 6.8% on the last closing price of S$0.365, we believe the downside may be capped from here for the counter.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 03/10/13

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