Tuesday, February 4, 2014

Metro Kajang - plantation proxy

It is a niche township developer in Kajang with an uninterrupted 25 year profit track record. Its venture into palm oil cultivation in Indonesia since 2008 had started to bear fruit, driving up core profit by 96% in FY2013.

It had a young age profile of circa of 4 years for its 14.4k ha of palm oil estates in East Kalimantan.

The longer term, MKH might float its plantation operations upon full maturity of its young oil palms which is currently (Feb 2014) undervalued to unlock value for shareholders.

At current valuation (04 Feb 2014) the marker is assigning zero value to its plantation business which estimate is worth more than rm1 billion.

The group is currently (Feb 2014) in talks to acquire 49421 acres of land in Kalimantan to expand its plantation land bank, which will sustain its long term growth prospects.

Its property sales are unlikely to be affected by the cooling measures introduced by the government, largely because its properties are targeted at the mass market.

It has rm503 million unbilled sales. It will launch rm890 million worth of new projects in FY2014.

Metro Kajang is a well-known brand equity in Kajang and Semenyih. With a land bank of 202.34ha there, it is set to benefit from the rising land prices, given its low land cost and strategic tracts adjacent to two mass rapid transit (MRT) stations.

Its recorded unbilled sales of RM503mil in FY13 is underpinned by the rising demand for mid-market housing, improved connectivity via MRT and growing affluence in its focus market,

Catalysts …
– Fast growing, cheap plantation play.
– Under appreciated.
– Beneficiary of MRT connectivity.
– Record unbilled sales buoyed by strong demand for affordable housing.

Risks …
– Heavy focus on Kajang/Semenyih development
– Fluctuation in crude palm oil prices
– Headwinds in the property market

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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.