King Wan

King Wan: OSK has a short note on KWAN's upcoming results release next week (estimated 29 May). House raises 4QFY13 earnings by 9.6% given its strong core business. KWAN's healthy order book of $183.6m is equivalent to three years of revenues, supporting the forward dividend expectations of a 1.5¢ dividends semi-annually. In addition, its Thai associate Kaset Thai Industry Sugar (KTIS)- a sugar mill, is set to go on IPO in mid-July, and KWAN would be expected to recognize profits on the sale of its KTIS stake in 2QFY14. OSK expects a final 1¢ dividend to be declared at its 4QFY13 results, followed by an interim dividend of 1.5¢ in 2QFY14, as well as a 1.5¢ dividend semi-annually thereafter. Based on the expected dividends on KWAN's current share price of $0.300, the 12-month forward yield is at 8.3%, following by a FY14 yield of 9.7%. Any stock price correction due to a poor y/y comparison on KWAN's 4QFY13 financials would present a clear over-reaction and an opportunity to accumulate- as KWAN's Thai associates no longer contribute to its financials. OSK maintain BUY with a TP of $0.400 (implies 33% upside from current price of $0.300).