MTQ Corporation

[dydx]

Though if everyone takes scrip dividends, is it similar to no dividend being declared since everyone gets a proportionate amount of shares and the company retains all of its profit ? So technically, there is hardly any difference ?

Not all shareholders - especially among the minority shareholders - will opt for scrip dividend, even though it makes sense to do so in this case. As a result, the major shareholders like the Kuah Family who opt for scrip dividend will invariably inch up in their percentage shareholdings afterwards.

When most of the minority shareholders opt for scrip dividend, more new MTQ shares will be issured. Invariably, some of them will end up selling some shares, as many will take the $0.83/share issue price for the new MTQ shares as their cost reference. So those who are keen to buy into MTQ or increase their stakes (including the Kuah Family) will have a chance to do so by mopping up such shares - likely at slightly lower (than current) prices.

[yeokiwi]

It is probably Junior Kuah idea.

"Hey Dad.. Why do you buy MTQ shares from open market?"
"Got 4% dividend mah..."
"Aiya...We can pay scrip dividend instead of cash"
"Correct hor... no need to pay stockbroker fees too and can increase my MTQ stake"

The only inconvenient part is the fractional lots that arises out of scrip dividend. Real inconvenient...
But, I think it is mainly the fault of SGX rather than MTQ.

What kind of era liao... still must buy a min of 1000 share per lot.

[Musicwhiz]

Yep like whay yeokiwi said, it's a good way to increase your stake in the company without incurring brokerage fees! The good thing is that this method helps the Company to save cash, yet at the same time allows it to increase its equity base.

As for the odd lots problem, it's not so much a problem if you do not intend to sell, but just hold to increase your stake over the years. Future dividends will be worth more based on your increased stake anyway, to eventually it will be "win-win".

[dydx]

Because the trading volumes are so low, when the market crashes they tend to fall the most too as most investors tend to throw at any price to get out.

Selling MTQ should not be an issue. If the share price is marked down, the Kuah Family will be there to buy, the company will likely re-activate buying back its own shares again, and many of the existing shareholders and value-oriented investors will buy.

[Musicwhiz]

Hi dydx,

Have moved your post on MTQ from the "Kingsmen Creatives" thread to the "MTQ" thread.

Thanks!

[Musicwhiz]

Have selected full scrip allotment for the interim dividend of 2c/share from MTQ, as I believe in the growth prospects of the Company and I want to participate in it by owning more shares.

Since the dividend payment date is Jan 2011, I'd expect my CDP account to be credited only then.....

[valuestalker]

same here.
Although my investment in MTQ is really insignificant.
Still need to monitor the FCF, so far it is kind of -ve due to the early stage of expansion (correct me if i am wrong).

[Musicwhiz]

Still need to monitor the FCF, so far it is kind of -ve due to the early stage of expansion (correct me if i am wrong).

It will probably be so for FY 2011, as they are spending on capex and staff training for the new facility in Bahrain. Take it as a one-off "hit", and FY 2012 and beyond should look smoother.

There is a chance of spillover of expenses into FY 2012 as well, so do take note (depending on timing of Phase II).

[valuestalker]

if i am not wrong, the FCF for last 5 years were -ve as well?

[Musicwhiz]

if i am not wrong, the FCF for last 5 years were -ve as well?

I think you're wrong, it was positive all the way....