HRnetGroup reported record revenue and profit since its listing in 2017. Its business has proven to be resilient and has remained profitable despite the pandemic. Other income which is made up of government grant and financial asset marked to market do cause some variation in its net profit. What is impressive this year is that despite the lower other income, especially in the second half, its net profit is the highest since its listing.
| (mil) | 2021 | 2020 | 2019 | 2018 | 2017 |
| Revenue | 590 | 433 | 423 | 428 | 391 |
| Gross Profit | 175 | 129 | 146 | 155 | 136 |
| Other Income | 15.9 | 17.8 | 17.7 | 6.8 | 9.0 |
| Net Profit | 70.2 | 49.8 | 55.8 | 52.4 | 46.4 |
| Net Cash | 327 | 332 | 266 | 282 | 289 |
Given the strong results, the company has increased its final dividend to 3.0 cents. Including the “last-minute” special dividend given in January, total dividend has increased to 4.0 cents for the year. Will it be able to sustain its dividend in the coming years? Based on past record, I am confident it will continue to pay about 50% of its net profit as dividend and I also think that it is able to achieve at least 60 mil in earning for the upcoming financial year (annualised 2021 2H core earning). So 3.0 cents dividend should be in the bag, especially when it has a strong balance sheet.
As for special dividend, it really depends. I would think there is a 50-50 chance of formalising an interim dividend in the coming years if they can continue to grow their top and bottom lines, especially in North Asia segment. While North Asia contributes only 27% of the revenue, it accounts for 41% of the gross profit.
Given that the group is likely to continue to give out 3.0 cents dividend going forward and possiblility of further increase in the next few years, I decided to increase my stake to 1.7% of my portfolio at an average price of $0.79. To fund this purchase, I have reduced my stake in Keppel DC Reit which still occupy 2.4% of my portfolio after the sales.
Towards Financial Independence 