Monday, April 28, 2014

BREM/Bertam - privatization

Its Datuk Khoo does not deny that its landbank is cheap on paper even though it is smack in the middle of good locations such as Segambut.

Khoo also says the company was an idea target for privatization before the surge in its share price (early Jan 2014).

Brem holds a 32.89% stake in Bertam Alliance Bhd which is also a property company. Brem could restructure Bertam in several ways, for instance for making the latter its property arm since it plans to concentrate on construction projects now (Jan 2014) that the five year grace period for the restriction has ended. But things are still on the drawing board with no concrete plan as yet.

Its landbank is cheap which could fetch margins as fat as 30% to 40%.

On top of that, it saves on construction costs as its own unit undertakes the property projects.

It land cost for its eight freehold parcels in Segambut Dalam totaling 34.38 acres carry an average net book value of rm73.55 psf. However the parcels could easily fetch between rm200 and rm300 psf of today (Jan 2014). Calculation shows that at rm200 psf, the parcels are worth rm299 million.

It still replenish its landbank nand has a strong balance sheet with a low gearing of about 10%.

Apart from the urban areas, Brem also owns more than 50% of a 46.21 acre freehold tract in Mukim Bukit Raja which is very close to the EPF upcoming Kwasa Damansara township. Brem will develop this parcel in about four years.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.