COMMENTS ON TALIWORKS CORPORATION BERHAD (8524)

 

FIGURE 1: TALIWORKS CORPORATION BERHAD LAST 5 YEARS SHARE PRICE TREND

 

**analysis based on 2019 annual report.

1.       GENERAL INTRO: The core business activities include water treatment, highway toll concessionaire, engineering and construction and waste management

 

2.       NOTABLE POINTS:

a.       it acquired 35% equity interest in SWM Environment Sdn. Bhd, which is a solid waste collection service provider in southern region of peninsular Malaysia

b.      the majority of its revenue is contributed by the water treatment segment (65%), followed by the highway toll segment (23%)

 

3.       IS THIS COUNTER A STRONG GROWTH STOCK?        

a.       REVENUE RANGE (RM million): 377.1 million as reported in 2019 annual report, this is a medium revenue company.

b.      SHARE PRICE: from 2016-2020, share price decreased from around RM1.50 to current level of around RM0.80.

c.       EARNING PER SHARE (EPS): earning per share in last 5 years was overall fluctuating, from 2.54 to 6.32 sen

d.      PRICE TO EARNINGS (P/E) RATIO: current P/E ratio is quite high at 67, indicating the share price is overpriced

e.      FUTURE POTENTIAL/PROSPECTS: share price expect to be stable in the next few years

f.        CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets and other investments amount to about RM 602.2 million, which is around 26% of total assets.

 

4.       IS THIS A STRONG DIVIDEND STOCK?             

a.       DIVIDEND YIELD: in 2019 financial year, TALIWORKS declared a dividend payout of 5.25 sen per share to shareholders, which amounts to a dividend yield of 6.25%.

b.      DIVIDEND PAYOUT RATIO: in 2019 financial year, TALIWORKS paid out 122.42% of its earnings to shareholders, in the last five years, dividend payout ratio ranged from 65.3 to 149.9%.

c.       CONSISTENCY: the dividend payout was consistent, the dividend paid to shareholders in the last five years ranged from 4.8 to 5.25 sen.

 

5.       IS THE MANAGEMENT PERFORMANCE GOOD?

a.       RETURN ON EQUITY (ROE): in 2019 financial year, TALIWORKS reported a poor return of shareholders’ equity, at 8.32%. In the last five years, its ROE ranged from 5.94 to 13.07%.

b.      COST-TO-INCOME RATIO: cost-to-income ratio is moderate, at 244%.

 

6.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 72.5 million, equivalent to RM 0.04 per share.

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is well supported by institutional investors, there are 17 institutional investors at top 30 major shareholders list, including LEMBAGA TABUNG HAJI (7.29%), EPF (3.22%) and insurance companies/investment funds. Its major shareholders are Tali-Eaux Sdn Bhd (19.02%) and Water Clinic Sdn Bhd (13.39%).

 

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