Wednesday, August 21, 2013

MK Land - largest landowner near TTDI-Puchong Highway interchange


The group's de-gearing exercise and business streamlining (liquidated ascertained damages issues and disposal of non-core assets) till late 2012 are within market expectations.

The group is toying with the idea of paying dividends again in line with the group's improved profitability and strengthened balance sheet.

MK Land will continue to focus on pushing the remaining units in Rafflesia (semi-Ds) and Metropolitan Sq (condominiums) with a combined RM760mil in gross development value (GDV). The group is exploring more new products such as bungalows and condominiums, possibly in the next one to two years (2013-2014).

Separately, MK Land reassured that the liquidated ascertained damages issues are now (late 2012) behind them, and the priority now is to complete the delayed project.

Estimate MK Land still has about RM90mil outstanding from the previous land sale, which will definitely help the group to reorganise its debt structure to be more efficient.

MK Land's total debt has improved by 10.6% sequentially from RM220.2mil to RM197mil (late 2012), which is in line with the group's plan to reduce debt. Net gearing is 0.11 times now (July 2012), and do not discount the possibility of further land sale which will put the group comfortably in net cash position.


A 25-acre Damansara Perdana and the 55-acre Setiawangsa land sale could add about RM320mil to the war chest, or equivalent to the group's market capitalization now.
 

MK Land is the largest landowner (about 170 acres net land) near the TTDI-Puchong Highway interchange should benefit from rising land prices and positive catalysts such as potential dividend or land sale could give the much needed sparks to the stock.

It expects its affordable homes project in Bangalore in India to contribute to the group's earnings beginning its financial year 2013.The project, with a gross development value (GDV) of more than RM3 billion, is targeted to take off after the company's current financial year. They are now in the midst of getting relevant approvals from the authorities in India. The 74ha project would take between eight and 10 years to complete.

The project will be carried out by MK Embassy Land Sdn Bhd, a joint venture between MK Land (47.5 per cent), Embassy Group subsidiary Star Dreams Pte Ltd (47.5 per cent) and Emkay Group subsidiary MKN Embassy Development Sdn Bhd (5 per cent). Emkay Group is the private vehicle of Tan Sri Mustapha Kamal Abu Bakar, who is major shareholder of MK Land.

MK Land sees better performance for the group with major contributions from the group's Damansara Perdana, Damansara Damai and Meru Perdana projects. The company's undeveloped land currently stood at 2,000ha located mostly in Damansara Perdana, Damansara Damai and Taiping, Perak.

It is developing a housing project in Meru, Perak, where about 1,500 units are affordable homes. The estimated RM300 million project is expected to be completed in five years from 2012.

Since inception, MK Land has invested RM1.8 billion to build affordable and low-cost houses. The company has a 5,000ha landbank that has not been developed yet.

The company had not looked at any merger and acquisition plan for the time being as at end Dec 2011.

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