What does a listed company like DutaLand Bhd do when it is flush with cash – RM750 mil to be exact?
Its minority shareholders, for one, are hoping they will receive a windfall in the form of a cash payout. That is unless the board of directors has other plans.
Sources say one of the options the board is mulling is to revive a long-abandoned project in the heart of Kuala Lumpur, the Duta Grand Hotel. However, that may not go down well with minorities. They want the cash.
And they don’t want to sell their shares either as although the net cash per share is 80 sen as the stock was trading at just 48 sen on July 11 2018.
The company has until May 2019 to find a new business after which it will slip into PN17 status as it does not have a core business.
DutaLand became cash-rich following a deal in October last year to dispose of 11,579ha of plantation to Boustead Plantations Bhd’s unit, Rimba Nilai Sdn Bhd, for RM750 mil. The deal involved the disposal of 42 parcels of land in Sandakan, Sabah and was completed in May 2018.
Although it has so much cash, the market feels shareholders will not be rewarded. Instead, the sales proceeds are likely to be channelled into other projects including reviving the abandoned Duta Grand Hotel, etc.
DutaLand is still looking at opportunities. The net cash should be around 80 sen given it has just declared a five sen special dividend.
Notably, DutaLand’s balance sheet is in a net cash position.
As of March 31 2018, its cash and bank balances stood at RM25.1 mil against borrowings of RM1.6 mil.
Its cash and cash equivalents increased to RM40.1 mil as of March 31 2018 from RM14.3 mil a year ago.
Given DutaLand’s relatively strong balance sheet, investors are hoping the company will be able to make a strong comeback after years in the doldrums.
But the big question remains – will shareholders finally get their reward in the form of a cash payout?
The board had said it intends to maintain DutaLand’s listing status and is deliberating on the new businesses and/or assets to be acquired. It aims to diversify its business portfolio to generate recurring income.
Group managing director Tan Sri Yap Yong Seong, or popularly known as Duta Yap, is DutaLand’s single largest shareholder with a 50.45% stake.
Yap remains tight-lipped on the potential new businesses on the cards.