Surprise Dividend by Tropicana

Tropicana FY13Q3 Financial Result

TROP	FY13Q3	FY13Q2	FY13Q1	FY12Q4	FY12Q3	FY12Q2
Revenue	363.4	362.1	305.3	234.1	161.1	117.1
Gross Profit	130.2	117.7	130.7	98.1	78.4	53.4
Other Income	9.0	14.6	1.9	33.5	65.0	136.1
Finance Cost	27.7	15.6	16.5	13.9	8.5	4.7
PBT	49.3	62.3	66.8	60.8	80.1	58.7
PBT%	13.6	17.2	21.9	26.0	49.7	50.1
PAT	23.7	38.3	43.8	60.2	57.8	38.8
P/Dev Rev	269.2	312.4	270.1	210.6	133.9	106.7
P/Dev PBT	31.3	45.6	64.2	32.9	16.6	19.6
P/Inv Rev	36.8	33.9	35.1	21.7	26.5	10.4
P/Inv PBT	19.9	25.5	14.0	25.0	66.1	46.2
Inv Rev	57.5	15.8	0.0	1.8	0.7	0.0
Inv PBT	-1.8	-8.8	-11.4	2.9	-2.6	-7.1
Total Equity	2345.5	2336.7	2174.5	2061.1	1662.2	1074.3
Total Assets	5045.4	4990.5	4667.1	4518.4	3982.9	2659.5
T/Receivables	236.0	214.9	101.2	103.5	52.3	70.3
Prop dev cost	370.3	412.8	517.1	417.2	387.2	378.1
Inventories	68.8	73.4	30.4	20.3	20.4	18.1
Cash	333.6	372.0	282.9	213.7	155.8	130.0
Total Liab	2520.3	2477.8	2362.0	2329.6	2188.0	1455.3
T/Payables	226.8	205.3	178.1	201.5	165.5	150.5
Oth/Payables	152.4	161.1	132.5	129.4	351.8	86.8
ST Borrow	315.2	298.2	240.2	223.9	302.3	180.6
LT Borrow	1613.6	1562.6	1610.9	1642.1	1188.6	855.5
Net CF	145.4	139.2	59.0	86.4	36.3	10.8
Operation	-98.4	-120.6	-94.7	-16.6	334.8	6.7
LD gain	60.4	60.4	58.1	0.0	0.0	0.0
FV gain	12.1	12.1	0.0	112.1	98.7	132.3
Investment	32.3	106.0	105.6	-894.9	-615.8	-42.3
Proceeds LD	149.0	149.0	126.0	0.0	0.0	0.0
Financing	211.5	153.8	48.1	997.9	363.4	46.4
EPS	2.20	4.31	5.50	8.31	12.55	8.42
NAS	2.12	2.45	2.54	2.60	3.61	2.33
D/E Ratio	0.68	0.64	0.72	0.80	0.80	0.84

LD gain = gain on disposal of land held for property development
FV gain = gain for fair value adjustment of investment properties
Proceeds LD = proceeds from disposal of land held for property development


I find Tropicana's financial report very complicated, and need more time to digest. Of course I won't understand all of them.

Since the assets injection into the company, Tropicana's results have been "affected" heavily by land disposal gain & fair value adjustment gain on investment properties.

For current FY13Q3, Tropicana's revenue stands at all-time high of RM363.4mil, which is a substantial increase of 126% YoY but only a marginal 0.4% increase QoQ.

Its overall PBT & PAT are non-comparable as there are significant other incomes included such as land sales and fair value gain almost in every quarters.

In term of gross profit (purely from property development and investment), Tropicana registers an 109% increase from RM181.4mil (9M12) to RM378.6mil (9M13). This shows that its core business is growing.

For solely property development activity for the cumulative first 9 months period, revenue increases 145% from RM348.3mil to RM851.7mil, while PBT increases 185% from RM49.5mil to RM141.1mil compared to preceding corresponding year.

This set of result is amazing to me. The only little set back is that the property development contribution for FY13Q3 is significantly lower compared to previous 2 preceding quarters.

Current quarter's net profit of RM23.7mil is the lowest in the previous 6 quarters due to lack of land sales and fair value gain.

However, I think its next quarter result from property development should be better in view of strong property sales in 2HFY13. The ground-breaking of its Penang World City development has just taken place last week.

       Penang World City

Anyway, Tropicana's balance sheet remains tight, as it continues to borrow from banks.

For 9MFY13, Tropicana has paid a total finance cost of RM59.8mil, which can represent a whole year profit of some small developers.

What is surprising to most is, Tropicana still manage to give an interim dividend of 4.5sen (less tax) for its FY2013. This is the first interim dividend given at this time from Tropicana/Dijaya. However, it is not sure whether it will give a final dividend later.

Perhaps Tropicana's management is very confident with its de-gearing exercise. It has lots of assets. Although the deal with CMMT fell through, Tropicana might have secured other interested buyers for its investment properties. The encouraging sales of recent property launches might help it greatly.

Tropicana achieves record sales of RM1.85bil in 9MFY13 and its unbilled sales is at an all time high of RM2.2bil in end of September. It has a potential future GDV of RM79.5bil from its undeveloped 2,178 acres of landbank.

The proposed private placement of 10% should be completed by the first quarter of 2014, that means more equity but further earning dilution.

I hope Tropicana can achieve a net profit of RM150mil in its full FY2013, which is slightly lower compared to FY2012. If this is achieved, its projected EPS will be 13.6sen. As it has a market cap of RM1.5bil, I will give it a target PE ratio of 12x. Thus, my short term target price will be RM1.63. 

Tropicana's share price seems to find its bottom after hitting a low at RM1.24. Currently it is trading at RM1.36.

Base on several reasons, I think it is not the time for me to buy more shares to average down Tropicana.

Nevertheless, I still haven't lose all the confidence in Tropicana. So, it is neither a sell.