Rank
Group: In my thumbnail on Rank Group, at the start of the month, my
biggest stumbling block was that you were, or would be, an outsider at a
company where one party (the Hong Leong Group) controlled 69% of the shares.
Due to the Prudential/M&G owning a near 7% stake, which was deemed to be
not part of the free float, the group was in breech of the criteria for a
London premium listing. It was only through a special dispensation that the
quote was being retained.
The results themselves were pretty
good with more encouragement for investors than for several years. As a result
the shares have been pretty good performers, climbing away from a plateau
around 160p that they had been stuck on for almost a year. When I wrote last
the shares were 176p and I was caught between liking the shares and worrying
about the shareholding structure. Today, with the shares at 187p, a level last
seen in early 2007, a subsidiary of Hong Leong is selling a 12.8% stake, in a
book-build, at no lower than 185p, to take the controlling stake down to 56.1%.
This will sort out the free float concerns and greatly improve liquidity. This
is good news, but at the same time takes away any takeover hopes for the
foreseeable future, with Hong Leong not a buyer, but retaining a controlling
blocking stake.
For the year to 30th June
2015, a possible 14p of eps is a PE of 13.3x and a 4.8p dividend would be a
2.6% yield. For me that looks enough for now and I’m not sure that fresh
purchases are merited. What remains to be seen though is whether index funds
and index huggers generate enough demand to squeeze up the price. If so, then profit
taking would be tempting. (Neil Cumming, 18th February 2015)
These comments are not a personal
recommendation to deal. Any investments can fall as well as rise in value, so
you could get back less than you invest. I may have a financial interest in
some of the stocks written about. www.dividendpower.co.uk or e-mail at info@dividendpower.co.uk Twitter: @DividendPower
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