RRST
Dug more into this one:
- Trading below TBV
- Three largest shareholders own around 76%. Two biggest shareholders are large investment companies. This is probably why their dividend payout is so generous. Based on this, as long as these guys own a large amount of shares in the Company, we can expect them to refrain from destroying S/H value.
- As you mentioned, big CAPEX is behind them, so their FCF should increase. If FCF increases, look for the dividend payout to increase in future years as well.
- No debt used in capital structure and none used since IPO in 2006. CAPEX was financed through start up cash and OP CF.
- No equity raised since IPO in 2006.
- Strategic relationships with the two largest shareholders.
One thing to watch for is the decline in margins. Even though revenue has increased, margins have gone down over the past five years which isn't a good sign.
However, as long as the biggest shareholders maintain their investment, this seems like a good value play based on their asset base, FCF potential based on large CAPEX being in the past, dividend payout and strong s/h value (i.e. lack of debt and equity raises, dividends etc...). Two of the three big inside s/h's have actually increased their stake in the Company since the IPO.
The stock is also trading at record low levels since IPO in 2006. If the Company increases the dividend payout (assuming FCF increases) then we could also see an increase in the stock price. However, even if the stock price stays where it is, you're still getting a 10.82% yield.
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