Wednesday, August 14, 2013

Mulpha Interntional - jewel landbank in Iskandar Johor


A revival in the fortunes of Mulpha Land Bhd and Mudajaya Group Bhd is pointing to a re rating of Mulpha Intl, which holds equities in the two companies.

Furthermore, Mulpha Intl’s jewel in the crown – its landbank in Iskandar Malaysia, Johor – is a property development hot spot and is estimated to be worth billions.

A restructuring exercise will see Mulpha inject a two acre prime tract into Mulpha Land for rm47 million. The project in PJ’s Section 13 has an estimated GDV of rm200 million to rm250 million – much bigger than MLand’s market cap of rm111 million (early Aug 2013).

The land for the development of high rise serviced residences, previously housed Mulpha Headquarters, which has been moved to Menara Mudajaya in Mutiara Damansara.

Under the restructuring plan, Mulpha Intl will concentrate on the southern region of Peninsular Malaysia through its Leisure Farm development in Iskandar Malaysia. As part of the deal, MLand will sell two parcels in Johor to Mulpha Intl’s wholly owned unit, Leisure Farm Equestrian Sdn Bhd for rm20 million.

All other developments in the central and northern regions of Malaysia will be parked under MLand.

Apart from stake in MLand, which is appreciating in calue, Mulpha Intl’s landbank could be a wildcard too. It has a rather large landbaning Iskandar Malaysia and old Coast, Australia. Its key project in Iskandar Malaysia is Leisure Farm while in Gold Coast it is Sanctuary Cove.

It was reported that Mulpha Intl is poised to be a beneficiary of rising land values in Iskandar Malaysia. Transaction prices there have ranged between rm12.20 and rm22 psf since Aug 2011. In comparison, Mulpha Intl’s landbank of 1077 acres at its Leisure Farm development carried a net book value of rm366 million as at Dec 2011 of just rm7.80 psf.

Assuming a conservative market price of rm15 psf, this would boost its end Dec 2011 book value by an incremental rm338 million or 14.3 sen per share to rm3.3 billion.

Mulpha Intl could be cheaper entry into Mudajaya, which is tipped to be a big winner of rm20 billion worth of contracts for the construction of four new power plants in the next few years from 2013. Mulpha holds a 22.21% stake in Mudajaya.


Mudajaya has an outstanding order book of rm2.2 billion with projected new job wins of about rm500 million to rm600 million.

With Mulpha Int’s 22.21% stake in Mudajaya, its share of profit would translate into earnings for FY2014 and FY2015.

Mudajaya’s net assets stood at rm2.13 per share as at March 31 2013.

Mulpha Intl’s stake in Mudajaya is worth about rm330 million almost about a third of its market cap. However valuations for Mulpha may be capped by an investment holding discount.

It does not help that Mulpha Intl has no dividend policy as it believes in a share buy back
Be that as it may, Mulpha Intl will need help to return to the black after posting a net loss of rm475 million for FY2012 compared with a net profit of rm179 million in the previous year.

The huge losses were attributed to the losses made by its 26% owned associate FKP Property group, which is listed on ASX.
 

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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.