RAPID ... Turned Into A Real Estate Play !!!

At rm6.00 it is currently (25 Aug 2014) trading at 200 times historical earnings.

Market observers said it has the potential to be turned into a real estate play.

The company’s largest assets are in its investment properties, which include a shopping mall in Teluk Intan, Perak with 127000 sq ft of floor space. It also has a 135504 sq ft hypermarket in Majung, Perak, and an office block in Damansara Uptonw, PJ (5899 sq ft, carried at its 1997 price of rm1.77 million).

Other properties include a 21000 sq ft vacant freehold parcel and 2257 sq m car park in Sri Hartamas, KL, which were carried at 2001 and 2004 prices of rm3.08 million and rm3.09 million respectively. These properties are among those earmarked for development into investment property.

Using a rm200 to rm500 psf range for land in Sri Hartama, which can vary depending on location, the 21000 sqf land should be worth at least rm4.2 million.

80% of RAPID’s operating profits in FY2013 were from investment holding versus the precision tools business. Its loss making retailing business has since been discontinued.

For the 1QFY2014 ended March 31, RAPID’s net profit jumped to rm3.9 million from rm106000 in the previous corresponding period, on the back of a 25% jump in revenue to rm7.65 million.

Its net asset per share stood at rm1.44.

Its cash balance is rm4.47 million as at end March 2014. Its borrowings and payables stood at rm31 million and rm111 million in long term loans.

Its investment properties are carried at rm238 million.

The group continues to look for opportunities to acquire properties that generate long term recurring income as well as capital appreciation.

Meanwhile Datuk Dr Yu Kuan Chon has been busy buying into precision tools specialist Rapid Synergy Bhd, a company in which he has been the single largest shareholder.

Yu’s flagship is YNH Property Bhd, a Perak-based property developer.

Market talk has also surfaced that Yu has been nibbling shares of MUI.

Yu has cleverly traded HLCap shares in such a way that it hasn’t suffered a prolonged breach of the minimum 10% free-float threshold required for active trading, which could have led to an automatic suspension of the shares by the exchange. But listing rules also dictate that listed companies have to maintain a minimum 25% public shareholding spread requirement.

Since early August 2014, Datuk Dr Yu Kuan Chon has been mopping up shares of semiconductor firm Rapid Synergy Bhd, which he believes the company has growth potential.

Similarly, in the case of YNH Property Bhd, YNH Property will continue to develop its landbank in the foreseeable future and it is looking at a real estate investment trust structure for its investment assets under the group.

As at Aug 20 2014, Yu had a 20.25% direct interest In Rapid Synergy, with another 8.61% being held indirectly. These shares were bought from the open market and off-market at prices between RM5.97 and RM6.00.

Yu has been buying when other directors of Rapid Synergy are selling their shares. Yu has been a long-time shareholder of Rapid Synergy and a non-executive director since 1998.

Over the last few years prior to 2014, Yu has been buying up shares of his flagship property company, also on the belief that it is undervalued. Currently (Aug 2014), he controls close to one-third of it as opposed to four years ago, when his stake was under 20%.

YNH Property is currently (Aug 2014) embarking on three new projects, one being the proposed RM3.4bil mixed development along Jalan Sultan Ismail in Kuala Lumpur.