In Oct 2014, the company completed the sale of its 25% stake in First Balmoral Development, which a portfolio of 13 units of freehold residential apartments at 1 Balmoral Crescent, Singapore.
In doing so, Noel has locked in a gain of around $2.4m or an EPS of about 2.1 cents/share, over the book value of $1 m.
The management did mention about using the proceeds for other investment opportunities and returning part of that to shareholders.
I expect the management to return about 1.3 cents/share from this transaction alone.
Catalyst 2
In June 2014, the company was awarded a huge contract to distribute SG50 baby jubilee gift sets.
The contract value of $7.47m, based on a conservative estimated net margin of 4.7%, could add EPS of about 0.34 cents/share for 2015. I suspect it might be slightly more because the company probably is going to use the extra workers they have hired and factored in the contribution. In other words, I am expecting improved productivity and an estimated 0.50 cents/share.
From here, I expect the management to distribute a special dividend of about 0.30 cents/share.
Catalyst 3
On 18 March, the company was awarded another mega contract (with revenue potentially up to $7.9 m) from the Monetary Authority of Singapore for the packaging, marketing and sale of numismatic currency sets.
Using the same estimated margin as above, I estimated the company would make about 0.55 cents/share.
However, this will most likely be recognized in financial year 2016 (ending June 2016). The special dividend for this will come in the year 2016 to shareholders.
Conclusion
Earlier, I mentioned that most likely I will hold this stock for a short period of less than 2 years. Judging from the above catalysts, we should expect a huge jump in earnings and dividends of around 1.5 cents (from normal core business) + 1.3 cents (catalyst 1) + 0.3 cents (catalyst 2) = 3.1 cents/share for the financial year 2015.
This translates into 10.5% yield at the current price of $0.295.
For FY2016, I am expecting a dividend of at least 1.5 cents (from normal core business) + 0.4 cents (catalyst 3) = 1.9 cents/share. This of course excludes any potential major contract that may be won in the future with its better brand recognition.
All told, there are risks if you are holding this stock for a long term play. I have highlighted some of the major issues they are currently facing in the overhead operations cost and in Malaysia and China where they have ventured but are still facing a major struggle to compete with others given the low barriers to entry for local vendors.
I'll post an update should I decide to sell the stock.
