K1 VENTURES LIMITED
K01.SI
Focus on Existing Portfolio.
- K1 Ventures recently reported its full year results for FY15. Net profit of SGD24.9m was up 24% y/y, driven by gains from the sale of its investment in China Grand Auto and dividend income from Guggenheim Capital.
- The group announced a capital reduction of 1.5 cents/share, in lieu of dividends. It had earlier distributed 2 rounds of interim dividends amounting to 4 cents/share.
- Management reiterated that it will not be making new investments, and will focus its existing portfolio for eventual exits and distribute excess cash back to shareholders.
- The group also announced that that Knowledge Universe Education (KUE), one of its investee companies, had sold its childcare operating business in the U.S. to Swiss-based investment firm Partners Group on 13 August. The sale involves KUE’s key brands such as KinderCare Learning Centers, which operates 1,400 centers in 38 U.S. states, Children's Creative Learning Centers and Champions. Along with the sale, k1 received a USD61.5m distribution from KUH, the holding company of KUE.
- With this sale, KUH would have substantially monetized its entire education-related ventures. KUH is currently sitting on substantial cash reserves that we believe will eventually be returned to its shareholders. Its remaining operating asset includes a real estate portfolio of 800-childcare centres.
- K1’s other key investment, Guggenheim Capital, is also doing well with its AUM growing to more than USD210bn.
- We continue to like the stock for management’s investment track record and the potential for meaningful capital appreciation on its Guggenheim investment.
- Maintain BUY with TP of SGD0.23.
Goh Han Peng | http://www.rhbgroub.com/ RHB Securities 2015-08-20
0.23
Same
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