The “highlight” of YPg’s FY2008/09 results is the omission of the final dividend, which was 2 cents per share for ye Mar ’08, despite a 51.7% increase in net profit to $15.19 mln.

In other words, shareholders would have received only the interim dividend of 1 cent for ye Mar ’09. At 30 cents, the yield is 3.3%, a world’s apart from levels at the time of listing, when 11.8 cents were paid.

(Management has however assured that the policy on dividends for FY2010 will be to return excess cash to shareholders after taking into account current earnings, capital structure, and consideration for future growth.)

The reason cited, and an obvious one, is because of the need to refinance the $129 mln bonds maturing on September 30 th this year. (Interest expense totaled $5.62 mln.)

One possibility that cannot be ruled out is a rights issue, in the event not the entire sum can be refinanced. However, at 30 cents, YPG’s market cap is only $47.4 mln, compared to $327 mln at IPO in 2004, and Tangible Net Assets of $56 mln.

Indeed, YPG’s high gearing has been of concern to us. (Another being the long-term prospects of the company’s core business - the publishing of directories.) Note Shareholders Funds of $121 mln includes Intangible Assets (goodwill) of $177.05 mln.

The high gearing has restrained management’s long- stated desire to make acquisitions, other than the “lucky” punt on CityNeon, which realized $1.7 mln profit in Q3 ended Dec ’08, and one of the reasons for the “significant” profit increase in ye Mar ’09. (In the preceding fiscal year, YPg was not so lucky, incurring $3.4 mln one-off forex loss.)

(In the fiscal year recently ended, YPg, now under Stanley Tan’s lead, has acquired for $6 mln, Singapore Information Services Pte, which publishes and distribute trade directories with a focus on overseas markets. It also acquired Global Magazines Pte, which publishes “ WEALTH ” magazine)

Yellow Pages continues to deserve a SELL rating, especially after the recent surge from the 13-cent low, which was only 6% of its post-listing high of $2.07.