DUET Group

 

DUE Details
Board positive over CKI consortium acquisition proposal: DUET Group (ASX: DUE) stock has surged about 6.55% in the last five days (as on January 16, 2017) as the group’s board recommended in favor of the take-over proposal from Cheung Kong Infrastructure Holdings Limited (CKI), Cheung Kong Property Holdings Limited (CKP) and Power Assets Holdings Limited (PAH) (the Consortium). This Consortium proposed an entire acquisition of DUET’s stapled securities on issue. As per the proposal, the group’s shareholders would get total cash proceeds of $3.03 per stapled security including a Consortium pay of up to $3.00 per stapled security (Scheme Consideration) coupled with Special Distribution from DUET of at least $0.03 per stapled security.
 
Building Western Australia’s largest gas storage facility: The group’s 100% owned DBP Development Group (DDG) is building a major gas storage facility in Western Australia (WA). This location and size of the Tubridgi Gas Storage Facility would boost the security of natural gas supplies in the state. The group sees a strong growth opportunity via this facility which is forecasted to be operational by June 2017. Overall construction cost is expected to be $69 million, which would be funded by $38 million of DUET’s working capital while the rest from DDG’s bank debt facility. The storage capacity of this facility is over 42PJ with the daily injection and withdrawal rates over 50TJ/day. Currently, this gas storage facility’s customer is CITIC Pacific Mining Management, a developer and operator of the Sino Iron magnetite project at Cape Preston and has a 10-year gas storage agreement with options for a further 5 years. Moreover, DDG is further negotiating with potential customers. 


Location of facility at Western Australia (Source: Company Reports)
 
Dividend highlights: The group declared 9.25 cents per stapled security (cps) as its FY17 interim distribution (for six months ending December 31, 2016), which would be paid in February 2017 (record date of December 30, 2016). DUET reiterated their fiscal year of 2017 forecasts of 18.5 cents per stapled security payable in cash. DUE stock has an outstanding dividend yield.
 
Recommendation: DUE stock rallied over 24.68% in the last three months (as of January 16, 2017) placing them at higher levels. Moreover, the stock is currently trading at an unreasonably high P/E. We think investors can book their profits ahead of the group’s interim 2017 results scheduled to be released on February 17, 2017. We give a “Sell” recommendation on the stock at the current price of – $ 2.93

 
DUE 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 currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.