Folkestone Limited

FLK Details
 
Folkestone Limited (ASX: FLK) is into real estate funds management, investment, and development company in Australia. The company operates through Property Development and Funds Management segments.
 
Compelling offer for FLK Shareholders:Folkestone Limited’s (ASX: FLK) stock rose in the past two days after the investors got to know about the compelling offer as Charter Hall Group agrees to acquire FLK for $205 million, and the acquisition is expected to be funded by cash from available investment capacity. This is also due to the fact that the proposed Scheme Consideration of $1.39 is 25.2 per cent premium to the last close, a 25.6 per cent premium to 30 day VWAP, a 25.6 per cent premium to the 3-month VWAP and a 28.7 per cent premium to NTA. FLK shareholders would receive $1.39 cash per share, including a Charter Hall cash consideration of $1.354 per share and a special dividend of $0.036 per share, expected to be 100% franked but subject to ATO ruling.
 

An indicative timetable for the Scheme (Source: Company Reports)
 
The Scheme Consideration represents premium to all historical trading price of FLK stock since 2011. Moreover, even if the Charter Hall Group does not materialize and proceed, even if no superior proposal come up, FLK stock price might continue to be at the level of price of the Scheme Consideration for the short term. Additionally, the company was looking for a range of strategic opportunities to maximize shareholders’ value, that includes maintaining the status quo or the sale of selected assets. FLK Board has now unanimously recommended the Scheme and each FLK Director plans to vote in favour of the Scheme until no superior proposal comes up. It is expected that the Scheme will be implemented in early November 2018.
 

Compelling Proposal (Source: Company Reports)
 
On the other hand, for FY 18, the company reported 3.3% rise in statutory net profit after tax to $13.9 million and 48.1% rise in normalised net profit after tax. The Funds under management rose 26.1% to $1.6 billion during this period. Net asset value (NAV) per share rose 4.8% to $1.13 in FY 18. FLK has declared final dividend of 3.0 cents per share fully franked at the rate of 30.0 per cent to be paid, which is an increase of 9.1 per cent on the FY17 ordinary dividend. In addition, during FY 18, FLK launched four new funds. There has been 25.0 per cent rise in recurring fee income and cost recoveries to $9.5 million and 100.5 per cent rise in transaction fees to $6.3 million, that includes $3.3 million in acquisition fees from the launch of new funds and a $1.5 million leasing fee in respect of the CIB Fund. The company during 2018 has generated $5.1 million in performance fees in respect of the Wollongong and Sydney Olympic Park Income Funds and witnessed 6.3 per cent growth in distributions from Folkestone’s co-investment in the ASX listed Folkestone Education Trust to $4.6 million. As a result, FLK stock has risen 22.91% in three months as on August 23, 2018 and looks lucrative for profit booking. However, as of now, we give a “Sell” recommendation on the stock at the current price of $ 1.39 (down 0.4% on August 24, 2018).
 

 
FLK Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.