Proposed final dividend of S$0.018 ? In line with our expectation, PSL proposed a one-tier tax-exempt final dividend of S$0.018 per ordinary share for shareholders' approval at the forthcoming annual general meeting. Including S$0.005 per ordinary share of interim dividend paid out during FY08, dividend yield works out to 22.2% based on last transacted price of S$0.09. Payment of dividend, if approved at the annual general meeting, will be made on 18 May 2009. Given that FY08 was an exceptional year for the construction players, we expect FY09~10F dividend to come in lower at S$0.01 per share with a payout ratio of approximately 24%.

Maintain BUY recommendation with target price of S$0.13. Based on last transacted price of S$0.09, PSL is currently trading at 0.4x FY09F P/B. We continue to value PSL at 0.5x FY09F P/B, deriving our target price of S$0.13, approximately 3x FY09F P/E. With upside potential of 44%, we maintain our BUY recommendation on PSL.