GOPENG ... Oct10

The sale of PHS have raised many eyebrows considering that PHS has over the years been the most attractive asset for Gopeng, which is also in oil palm plantation and real estate development. In FY2009 ended Dec 31, PHS contributed RM32.9 million or 893.2% of Gopeng’s net profit of RM36.89 million.

With that in mind, why did Gopeng decide to let go?

Gopeng may have secured a handsome deal from the sale. Nevertheless the rm200 million cash from the share sale is not far from Gopeng’s market cap of RM209 million on 1 Oct 2010. It could arrive at an opportunity time as Goepng is looking to expand its plantation and property divisions.

Meanwhile, its real estate arm is developing the Tmn Sei Raja property in Perak.

For the six months of the current financial year, its net profits rose to 27.43 million. Revenue was up to rm12.77 million.

The company has rm8.89 million in cash against rm24.9 million worth of debts, thus a net debt position of rm16.1 million or a net gearing of 0.05 times based in equity of RM291 million.

The rm200 million proceeds from the divestment will push Gopeng to a net cash position. The question is, while it will utilize some of the cash to expand its current business, will a portion of the money be returned to shareholders as dividends.