Wednesday, May 7, 2008

CCB … dated May 2008

CCB is understood It is understood to be mulling a special dividend or capital repayment, which could be announced to Bursa Malaysia by the middle of May 2008.

A board meeting slated for early May 2008 will discuss some details of the payment, which have yet to be ironed out, and finalise the salient features of the repayment plan.

Sources say a payment of about 50 sen per share is being contemplated, which works out to a lump sum of about Rm50.3 million to the SSB shareholders.

As at end Dec 2007, CCB had about RM13.4 million in cash and bank balances, while the company’s trade receivables stood at RM67.9 million.

Why Capital Repayment?

It is further understood that CCB is considering it because there are little prospects to significantly grow its franchise for Mercedes-Benz vehicles locally, on the back of rising competition and thinning profit margins.

CCB’s free cash flow per share is in the region of 70 plus sen a share, and since there is very little capital expenditure, there is no reason for CCB to hold on to the surplus cash.

It is also noteworthy that the repayment plan comes on the back of CCB streamlining its businesses in the wake of the operating environment becoming more competitive with steel prices soaring and margin thinning.

Since Sept 2007, the company had been streamlining its business and divested several non-core assets. It also discontinued its distribution of Peugeot vehicles in Malaysia.

Other cost cutting measures taken by the company include reducing the size of its board of directors.

No comments: