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Friday, June 7, 2013

Is something big brewing in Tropicana?


Tropicana Corp Bhd has been making very interesting disclosures to the stock exchange virtually every single working day since it changed its name from Dijaya Corp Bhd.

There does not seem to be anything sinister in the disclosures since May 28 2013, the day it officially changed its corporate name.

The announcements seem to point towards something big brewing in the company.

What the market knows thus far is that this will be the year Tropicana's sales are expected to break the RM1 billion barrier.

Kenanga Research forecast Tropicana's revenue to hit RM1.27 billion this year, double last year's figures.

For the year ended December 31 2012, Tropicana registered a pre-tax profit of RM219.9 million on the back of a RM630.1 million revenue.

For the current financial year, Kenanga expects Tropicana's profit to hit the RM238 million level, and in the following year, its profit is expected to touch RM300 million.

Kenanga, which has an "outperform" rating on Tropicana, said the company is poised to launch RM3 billion worth of properties this year.

The launch should add on to Tropicana's current RM1.1 billion worth of unbilled sales, which is good enough to provide for two years of earnings visibility.

RHB Research, meanwhile, said Tropicana has strategic presence in three key property hotspots, namely Johor, Penang and the Klang Valley.

The research firm pointed out that Tropicana has land bank of 808ha, with a gross development value of RM60 billion.

Additionally, its ongoing asset monetisation initiatives are set to net between RM400 million and RM500 million in gross proceeds, RHB Research pointed out.

Coming back to the announcements made to Bursa Malaysia, Tropicana told the stock exchange on May 29 that it had fixed the price of its 86.307 million shares at RM1.78 per placement share. The shares were to be placed out to local and foreign institutional investors.

Tropicana was never known to have core institutional funds as substantial shareholders in the company.

The company's chief executive officer Datuk Yau Kok Seng said the exercise will raise gross proceeds of RM153.6 million.

The following day, Tropicana announced that Yau had exercised one million of his employees' share option scheme (ESOS) shares.

On May 31, Tropicana told the stock exchange it intends to seek approval from its shareholders for the proposed renewal of authority to purchase its own shares of up to 10 per cent of the issued and paid-up share capital of the company.

This is a routine announcement, though it should be noted that on June 5, Tropicana bought back seven million of its shares from the market.

Prior to the purchase, Tropicana held zero of its own shares as treasury shares.

On June 3, Tropicana said its founder Tan Sri Danny Tan Chee Sing had sold off 18.9 million shares at RM1.78 a share to a Malaysian government-linked institutional investor.

That set tongues wagging that the Employees Provident Fund was the buyer of the shares, and that Tropicana could be the next SP Setia in the making.

On June 5, Tropicana said it sold some land in Petaling Jaya for RM111.6 million, and that it booked a net gain of RM87 million.

Yesterday, Tropicana said it had sent out a circular to its shareholders on a dividend reinvestment plan that allows shareholders to use the cash given out as dividend to be reinvested in new ordinary shares of the company.

For the record, Tropicana said this week it will give shareholders 6.4 sen per share less 25 per cent income tax as dividend for the financial year ended 2012.

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