Tanjong may pay high dividend, says ECM Libra

Tanjong plc (2267), a power producer and gaming company, may pay a high dividend in its final quarter as earnings from its utility business continue to be strong. ECM Libra, an investment bank, expects the group to pay a full year dividend of RM1.16 for the year to January 31 2010, which is the same amount it paid for 2009.

So far, it has declared total dividends of 52.5 sen for the first nine months of the current financial year.

"We continue to like Tanjong as a defensive stock as well as for a dividend play," ECM Libra said in a research report released yesterday.

A stock is described as defensive if its price does not suffer volatile swings over time and holders enjoy a continuous stream of dividend payouts.
Tanjong's stock has gained about 24 per cent so far this year, underperforming the broader market's 43 per cent gain in the same time.

The group, which also operates a leisure business called Tropical Islands in Germany and the TGV cinema chain, posted a third quarter net profit of RM177.8 million, an 83 per cent surge from the same period last year.

Revenue for the period to October 31 was almost flat at RM985 million.

Its net profit for the full nine months was RM550.7 million, 27 per cent higher than the same period last year.

Tanjong made more money mainly from its power business, driven by its Egypt power plants, as it spent less on plant maintenance.

However, luck was not on Tanjong's side in the numbers forecasting operation as it paid out more prizes in the third quarter against the second quarter.