Second Chance Properties plans to reward shareholders with a record dividend of 5.5 cents, as it reports better earnings for the year ended Aug 31 2021. At today’s (Oct 28) closing price of 35 cents, that’s a yield of 15.7%.

Last year, the company’s payout was 0.45 cents.

For FY2021, the company reported earnings of $9.8 million, up 121% over the preceding year. Revenue in the same period was $36.6 million, up 52.7%.

The company explains that its better earnings was because of its shift from investing in properties to investing in what it calls “battered down stocks with strong fundamentals for dividend income.”

For the year, it booked fair value gain on shares it holds of around $26 million. It also realized a gain of around $4 million from cashing in on shares it holds for investment.

The company, founded by Mohamed Salleh more than four decades ago, sold men’s wear initially before moving into women’s fashion and jewelry.

The company was originally listed in 1997 as “Second Chance Enterprises” and changed its name to “Second Chance Properties” as its property investment business became the dominant business.

Second Chance plans to invest more in the stock market. “The group looks to continue adding on to its portfolio to increase its recurring dividend income stream.”

As at Aug 31, the value of its properties was $159.12 million. In contrast, the value of its shares held for investment was $223.14 million. It used to own a bigger portfolio of properties mainly in strata retail units.

The company’s net asset value was 37.67 cents per share, versus 32.96 cents as at Aug 2020.

Perceiving its own shares as undervalued, the company in the past year bought back some 3.36 million shares at a cost of $852,121, which works out to an average of 25.3 cents. These shares have been cancelled.

“The repurchase of shares demonstrated the board’s confidence in the company and would only be conducted under circumstances which the board considered to be appropriate and in the interest of the group and its shareholders as a whole,” the company says.

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