Duty Free International

Duty Free International: Grp has just announced the completion of a deal to sell its assets in Zon Johor Baru for RM325m. Duty Free shares currently trade at around 17X P/E and sports a market cap of $480m. Grp didn't say if it would dole out a special div from the sale proceeds, but the co has a track record of paying decent div. However, the running yield is just 2.6% after the stock price has gone up about 100% in the past year or so. An independent director, Chew Soo Lin, has just upped his holding of the company's warrants by 1m units to 1.11m units. The warrants have a long shelf-life, expiring only in January 2016 and has been recently trading with little or no premium. Their excercise price is 35c and has a high gearing of 4X. Next Insight note that the buying by Chew Soo Lin looks bullish as the warrants are not entitled to dividends and are worth investing in only if the buyer perceives that they offer meaningful gearing and there is a good chance of the mother share rising in value. Chew Soo Lin was appointed an independent director in Aug11, by which time he already owned 1.34m shares of Duty Free. He is executive chairman of Khong Guan Flour Milling, which is listed on the SGX, and trades wheat flour and other edible products. Based on current-year annualised earnings of RM cent 6.43 , Duty Free trades at 17x P/E.