TChong ... Its Segambut Land Worth rm700 mil !!

It is sitting on a pot of gold. The land which houses sits motor assembly plant in Segambut, KL could fetch up to rm700 million on the open market. Its GDV could exceed rm3 billion. There is talk the company is mulling the development or sale of the land. But this will depend on whether it can move its assembly operations in Segambut to either of its two plants in Serendah and Shah Alam.

The sale would give TChong a boost as it is facing declining sales.

The land has good development potential, it is just 400m from GBH’s land, sold in July 2014 to Keladi for rm34.17 million per hectare.

So will TCMH monetize the land and use the cash to expand its motor assembly business?

Speculation about TCMH moving into property development is not new …

Tan Chong undertook a revaluation of its properties in FY2013. This gives it a total revaluation surplus of rm620 million, equivalent to rm0.95 per share. As the revalued properties include those in Malaysia, Vietnam and Laos, it is not known what the figure was for the Segambut land alone.

The 20ha were revalued at rm459 million or rm22.95 million per hectare from a previous book value of rm80 million.

It was also reported that TCMH plans to overhaul its business model to one which is asset light. Besides, the company is looking at ways to rationalize operating costs.

The asset light business model could involve the elimination of some significant capital assets from the balance sheet.

A rethink of its dealership strategy could also be under consideration.

Currently there are no definite plans. As for TCMH’s assembly operations, expects more collaboration on contract assembly between the company and other car marques. The Segambut assembly plant is being used for contract assembly under commercial agreements between TCMH and automotive players Mitsubishi Motors, Fuji Heavy Industries and Renault SAS.

If TCMH wants to consolidate its Segambut and Serendah plants under one roof, it must get the go ahead from its principal Nissan Motor Co Ltd.

If TCMH wished to consolidate two operations (Segambut and Serendah) it has to abide by its agreement with Nissan Motor.

Relocating operations and freeing up the land to unlock value is common in the motor industry.

Where will TCMH move to? Observers see a better chance of the company relocating operations to its Shah Alam rather than its Serendah plant if it wants to unlock the value of its Segambut land.

Tadmax ... Important Deal Completed By Oct 31 2014 !!

Tadmax Resources Bhd hopes to conclude the planned sale of its wholly-owned subsidiary Tadmax Power Sdn Bhd to 1Malaysia Development Bhd (1MDB) for RM317.3 million cash “as soon as possible

Taxmax Power is the owner of approximately 124ha (310 acres) of leasehold land in Pulau Indah in Klang, Selangor. Both Tadmax Resources and 1MDB had entered into a share sale agreement on February 20 2014.

The deal might be concluded by this October 31 2014.

This deal is deemed crucial for Tadmax Resources as it would enable the group to pare borrowings, and strengthen cash reserves for future acquisitions. These potential acquisitions include land bank for property development.

The key focus of Tadmax Resources moving forward was in property development.

For the six months ended June 30, 2014, Tadmax Resources narrowed its net loss to RM8.5 million from a RM26.5 million net loss a year earlier. Revenue came in at RM11.6 million compared with RM124,000 previously.

YTL Corp ... More Generous Dividends In Future !!

It has declared an interim dividend of 9.5 sen for the financial year 2014 ended June 30. This is the third interim dividend declared for FY2014, bringing the total to 12 sen per share.

The unusually high dividend declared by YTL Corp raises the question of whether the company which has a presence in water treatment, power generation, cement manufacturing, hotels, and telecommunications, will continue to be a generous in the future.

YTL can afford to pay high dividends if it wants to, given its huge cash hoard and its subsidiaries’ continued earnings growth. The group had rm1.38 billion in cash as at June 30 2014 while its borrowings amounted to rm40.7 billion, including current liabilities of rm8.8 billion.

If they want to, they can sustain the high dividend payout. However there are better ways to utilize the cash to generate future growth for the group.

About 50% of YTL Corp’s net profit came from its utilities business, with YTL Power contributing the bulk of it. The IPP is a cash cow, as it owns PowerSeraya in Singapore and Wessex Water in the UK. It also has a power purchasing agreement in Malaysia.

However YTL Power is facing the possibility of not having any new power generating assets in Malaysia as its PPA is expiring in 2015. The absence of any major capex may prompt YTL Power in which YTL Corp has a 50.63% stake to distribute its huge cash pile as dividends.

YTL Power can declare higher dividends to distribute its cash. It is not an issue for YTL Power’s shareholders if the company does not have any major power plant projects here soon, because most of them are holding the stock to earn dividends.

As at June 30 2014 YTL Power had rm8.96 billion in cash and bank balances. Its short term borrowings stood at rm2.07 billion while its long term borrowings were quite high, at rm21.5 billion.

Even if its PPA is not renewed beyond 2015 and having withdrawn from the Project 4A power plant, YTL Power still has capex commitments. This is because it owns YTL Comm Sdn Bhd, the 4G Internet network provider.

For FY2014 YTL Comm pre tax loss shrank to rm170.4 million from rm277.2 million previously. Revenue doubled to rm832 million from rm464 million a year ago.

YTL Power had already spent rm1.48 billion purchasing property, plants and equipment in FY2014.

Rex - Cash Rich

Tan Sri Mohd Ibrahim Mohd Zain, a substantial shareholder and director of Brahim’s Holdings Bhd surfaced in the company.

He has acquired a 1.6% stake in the company. He also has a 30% stake in Brahims. Those days he is said to be linked to Setron and Pengkalan as well.

Lee is a substantial shareholder holds a 3.4 million shares or 6.1% stake in Rex. Yee holds 5.6 million or about 10% stake in the company.

Observers thinks that Mohd Ibrahim could just be an investor, as he is in the oil and gas company Deleum Bhd in which he holds a 5.2 million shares or about 3.4% stake

As at end June 2014, it had cash and bank balances of rm15.3 million, rm22.4 million in long term debt ad rm427000 in short term borrowings. The company had rm73.3 million in reserves as at end June 2014 and net assets per share of rm2.15.

Its asset is land. Its 1.3 acre tract in Mak Mandin, Butterworth was last revalued in Nov 2011. It also owns 7.7 acres in Seberang, Prai, also in Penang and two plots measuring 9.5 acres in Pasuraun, Indonesia which had a net book value of rm10 million as at Jan 005 and Sept 2012. It also has 6.9 acres in Jiedong Economic Development Experimental Zone, China valued at rm9.4 million.

The land parcels in Penang – Mak Mandin and Seberang Prai have 29 years and 56 years remaining on their respective leases. One piece of land in Indonesia has more than 100 years remaining on its lease whereas the land in Jiedong has about 32 years remaining on its lease.

Halex - cash rich

In mid Oct 2014, a rm2 company Solaris Cemerlang Sdn Bhd surfaced as a substantial shareholder with a 12.1% stake in Halex, an agricultural chemical manufacturer.

The private company is linked to Datuk Yip Yee Foo.

The company had acquired a block of 12.8 million shares or 12.1% stake in Halex for rm12.5 million or rm0.98 per share from Yeoh Chng Poh who ceased to be a substantial shareholder in Halex.

Sources say the first part of Yip’s comeback plan, which involves Halex buying Kensington Development Sdn Bhd has already taken off. Halex had acquired stakes in Kensington Development for rm22 million and is now looking to buy an additional 50% stake for rm32 million cash.

Kensington Development has several property projects in Sabah and is in the midst of developing 8 Avenue with a GDV of rm148 million. Its total GDV stands at rm596 million which is largely from the development of its 30 acres in Sabah.

Yip was linked to several companies in the 1990s … Cold Storage and LBS Bina.

As at end June 2014 Halex had cash and bank balances of rm14.2 million and deposits almost rm2 million while borrowings were negligible.

Halex also had retained profits of close to rm40 million at end June 2014.

Huayang

It saw its net profit for the second financial quarter ended Sept 30, 2014 (2QFY15) double to RM25.98 million or 9.84 sen per share from RM12.33 million or 4.67 sen per share a year ago, driven by the strong uptake of its developments in Kuala Lumpur, Johor and Perak.

Revenue for 2QFY15 jumped 38% to RM139.49 million from RM101.25 million a year ago.

On segmental basis, the group’s property development division continued to be the major revenue contributor, the bulk of it contributed by projects in the Klang Valley (45%), Johor (33%), Perak (20%) and Negri Sembilan (2%).

For the six months ended Sept 30, 2014 (1HFY15), Hua Yang’s net profit doubled to RM49.92 million from RM24.65 million in the same period last year, on higher revenue which surged 52% to RM275.96 million from RM181.74 million in 1HFY14.

As at Sept 30, 2014, Hua Yang’s total unbilled sales stood at RM717.86 million.

It also has 543 acres (219.74ha) of undeveloped land-bank, with a total estimated gross development value of RM3.5 billion.

Looking ahead, Hua Yang anticipates further population growth in the northern region and hence, its recent acquisition of four parcels of land worth RM25 million in Ipoh, Perak.

The group also launched three new phases – Ceria 2, D’ecolake, and Lavender 2 – in Bandar Universiti Seri Iskandar in Perak.

In the Klang Valley, Hua Yang launched the final development phase at One South, Zeta Residence. The entire One South project has an estimated total GDV of RM1 billion, which is expected to be completed in 2017.

OFI (Local Snack Food Mfg) - Growth but losing of profit margin on competition

While multinational consumer food companies listed like Nestle and DLady command premium valuations, there are a number of smaller homegrown companies with good track records and brand names, trading at much lower valuations.

OFI is one such company, offering lower valuations, a cash rich balance sheet and bank equivalent dividend yield. It is a leading snack food and confectionery manufacturer, producing a wide range of snack food products.

The snack food industry is highly competitive and OFI has countered competition by constantly focusing on R&D to create new products. It has also invested in automation to enhance capacity and margins, especially to counter the impact of fluctuating commodity prices.

Its brands have also made a significant impact overseas with exports now (Oct 2014) overtaking local sales. Exports accounted for 52.3% of its total sales in FY2014. Sales to local made up the balance.

Over the last five years, its revenue has increased from rm125.7 million to rm226.9 million while net profit increased fro mrm12.4 million to rm16.2 million. However, its net profit margin is drop from 10% to 7%. (Instead of Nestle net profit margin increase from 9.4% (2009Y) to 11.7% (2013Y))

The company has a strong balance sheet with net cash of rm20.2 million as at end of June 2014. This is equivalent to rm0.34 per share.

KSL ... High Profit Margins Among Property Companies

A Johor based property developer has attracted consideration attention resulting in the stock becoming one of the top performers in the last quarter.

It is still trading at a trailing 12 month low of PER of 7.64 times and 1.05 times book value, with growing earnings and high margins.

Its developments are mostly based in Johor.

It has also ventured into the Klang Valley and is developing a 496 acre township called Canary Garden in Klang and a luxury condo in the KLCC area.

The company has a land bank of some 2000 acres and has unbilled sales of rm1 billion.

Its revenue surged from rm273 million in 2011 to rm680 million in 2013 while net profit increased from rm81 million to rm182 million the same period. For 1HFY2014 the company reported a 22.4% increase in net profit to rm140 million.

KSL has one of the highest profit margins among property companies with 32.7% chalked up in 1HFY2014.

It had managed to reduce its gearing from 23.12% in FY2011 to only 8% in 213.

Historically the company has not paid out any dividends, as it has been on an expansion path. However the company has slated its intention to have dividend payout.

'Danger' - Tek Seng (Agreeemnt Is JUST ONLY MOU, High Net Gearing) !!!

Its share price has doubled following news of a proposed investment into the company by a Taiwanese party in Sept 2014.

It is primarily involved in the manufacturing and trading of PVC sheeting. The company ventured into solar photovoltaic cell manufacturing business back in 2012. The solar division is gaining more prominence with the risk in demand for solar energy and is likely the reason it is seeking increased interest.

On Sept 2014 Teck Seng entered into an MOU with Taiwan listed Solartech Energy Corp who will invest rm100 million in Tek Seng’s 86.1% owned subsidiary TS Solartech.

TS Solartech had net assets of rm50 million and posted a net loss of rm14.14 million in 2013.

The investment is large relative to TS Solartech’s net assets of rm50 million and Tek Seng’s market cap of rm200 million. However it is unclear what its eventual stake in the solar business will be.

Indeed it should be noted that there have been no new developments announced since then, and the agreement is only an MOU at this stage.

The solar division generated pre tax losses of rm7.7 million in 2012 and rm13.9 million in 2013. Despite these losses, Tek Seng remained profitable with pre tax profit of rm9.63 million in 2012 and rm7.54 million in 2013. In 1HFY2014, Tek Seng’s pre tax profit jumped from rm2.5 million to rm14.4 million with a jumped in revenue to rm123 million.

Tek Seng’s net gearing stood at 55.8% as at end June 2014.

OldTown ... High Foreign Holding Vulnerable !!

Its share price falling is mainly due to a confluence if factors, including overall market sentiment, expectation of weaker consumer spending as well as selling foreign funds.

It has a high foreign shareholding at about 36% currently (Oct 2014). Oldtown did increase its share buyback in Aug 2014 to Sept 2014 offering some support but it has since stopped.

It has net cash of rm143 million as at end June 2014 which is supportive of a minimum 50% net profit payput policy.

Net profit is likely to remain flattish for 2014 on the back of slower consumer spending, rising costs and competition.

To improve sales, it is re branding different outlets/locations to target different market segments.

It is also looking to overseas markets to boost growth. It had opened an outlet in China and plans to add several more. The first café in Australia is expected in 1H2015 under a new master license agreement. Currently (Oct 2014) there are 237 Oldtown cafes, local and abroad, about half of which is wholly or partially owned.

Meanwhile it is working with key distributors in existing and new markets to expand demand for its instant white coffee products.

Inspired Video - Stop doubting of yourself and be BOLD!!

I was attended a motivate talk last weekend and this video was sharing during the talk. I feel that it is a quite inspiring video and wish to share with all my blog readers.

Please spend some time to enjoy this video. It is all just about take your 2:30 minutes only.

Who is Christine Ha?

She is the first blind contestant of MasterChef and the winner of its third episode in 2012.

GBH ... Cash Of rm1.28/shares Once Deal Goes Through !!!

It has been news for the wrong reasons. It announced the abortion of plans to turn the sanitary ware company into an oil and gas player.

It is hope truly lost for GBH?

As it stands, its existing business is not exciting. Revenue has been steady at rm40 million to rm47 million over the last four years though profits have been erratic, registering losses in 2010 and 2012 and profits in 2011 and 2013.

However its main attraction was its 13.93 acre land bank in Mont Kiara, which when sold will turn the company cash rich. The land has been since been proposed to be sold to Keladi for rm192.4 million.

Once the deal goes through, its cash on hand will increase to rm237 million or rm1.28 per share.

It is unclear what other ventures GBH will look to, but with such a large cash and the stock now (15 Oct 2014) falling closer to its net cash value, there will unlikely be a shortage of suitors.

NEXT For KLCI ... Market Oversold, Short Term Rebound !!

The market continued to stay in its bearish mode. The selling pressure remained as the volume was firm but the index was declining. The KLCI is strongly bearish as the short term 30 day MA has fallen below the long term 200 day MA. The last time this happened was in 2011 where the index fell 16% in two months from the then historical high. So far, the index has fallen only about 5% from the historical high and 16% from the current historical high is roughly at about 1600 points.

Momentum indicators like the RSI and Momentum Oscillator continue to indicate strong bearish momentum similar to the decline in 2011. Furthermore, the KLCI continues to trade below the bottom of band of the Bollinger Bands and this indicates strong bearish momentum.

However expect some technical rebounds because of the market being oversold in the short term…

The next technical support is at 1750 points based on a 50% Fibonacci retracement level of the uptrend that began in early 2013 and a 23.6% Fibonacci retracement from the uptrend that begain in late 2011.

Unless the index is able to climb above 1820 points support turned resistance level, expect the index to remain bearish.

GuanChong - shrinking net profit

Its financials in recent times have exhibited a shrinking net profit.

It is one of the largest cocoa ingredient producers in the region.

The dwindling profit in the past year was attributed to lower average selling prices of cocoa powder and stiff competition among intl players.

It has aggravated by a massive inventory writedown brought about by lower ASP for cocoa powder. It had written down rm21.54 million in inventories.

Its net margin also slumped in financial year end Dec 31 2013.

The company’s cocoa grinding process produces two main substances – cocoa butter, which is used to create the melt in mouth effect in chocolates and cocoa powder, which is used in cakes, and ice cream.

Since early 2014 cocoa powder has recovered… In 2013, it was in oversupply that caused an inventory build up.

Going forward, Guan Chong, it is facing a lot of competition from bigger players.

While outlook for cocoa powder prices seems lackluster and uncertain, it could reap better profits from its industrial chocolate factory that was commissioned a year ago that can be sold to bakeries and confectioneries.

Uncertainty - SILK Holdings ...

Its proposed sale of its highway concession to IJM Corp Bhd for rm395 million in cash seems to have hit a snag.

The meeting that was to have been held between SILK and the bondholders was cancelled. The meeting was to seek approval from Sukuk holders on the divestment of the SILK Highway.

Accordingly, CIMB and BIMB had voted against the proposal via proxy forms. Collectively the duo hold about 47% of the suku issued.

CIMB is believed to have rm274 million of the bonds of 36.4% of the total of rm752 million in debt paper.

SILK requires 75% approval from bondholders to pass the resolution to the sale of the highway at an EGM. In fact CIMB alone should be sufficient to stop the proposal.

The bondholders are against the proposed divestment because they are concerned that new owner may unfavorably vary the terms of the debt paper. Furthermore, the timing of the asset sale is just before the bondholders are due to enjoy high coupon rates of 8%.

The bondholders are demanding in excess of rm350 million cash as compensation upon completion of the sale of the highway concession. The compensation is basically for the bondholders taking a risk in lending to SILK when it was financially stressed and in dire need of restructuring its borrowings.

SILK considers the amount demanded as absurd. Should the company bow to pressure and pay the amount, it will only be left with rm45 million from the sale.

As at July 31 2013 SILK had accumulated losses of rm192 million, long term borrowings of rm829 million and current liabilities of rm58 million.

Oriental ... Rich In Cash & Assets

Kah Motor Co Sdn Bhd, a wholly owned unit of Oriental Holdings Bhd has secured a distributorship for Mitsubishi vehicles in Malaysia.

Some industry observers say the distributorship could see a resurgence of Kah Motor in the automotive industry. The company used to be the sole distributor of Honda vehicles in Malaysia but lost the franchise in 2000.

Oriental, DRBHicom and Honda of Japan are partners in Honda Malaysia which assembles Honda cars in Malaysia. Honda has a 51% stake in the JV while DRBhcim and Oriental have 34% and 15% stake.

Some sources however say current Mitsubishi distributor DRBHicom will still hold on due to the supply of cars to government departments and the police force.

It could also be that Oriental and DRBHicom have a working partnership to sell Mitsubishi vehicles.

Accordingly, Oriental’s automotive business accounted for slightly more than half of its total revenue in FY2013, and yet the division incurred losses.

Oriental also has plantation and property development ventures.

It also has hotel business in Thailand, Singapore, Australia, NZ and the UK. Its plantation segment is active in Indonesia and its plastics business has operations in China.

Its net asset value per share as at June 2014 was rm7.80. As at end June 2014 it had cash and bank balances of almost rm2.8 billion, short term debt of rm595 million and long term borrowings of rm2.6 million.

The company is 56.5% controlled by the family of late Tan Sri Loh Boon Siew. Another substantial shareholder is Mitsubishi UFJ Financial Group, a unit of Aberdeen Asset Management PLC which has a 11% stake.

The company also has many choice assets, such as landbank in Penang, the Klang Valley, Australia and the UK.

BFood ... A Giant Franchise In The Making !!!

It has doubled in value over the past three months prior to 10 Oct 2014 but observers reckon that there is still more potential upside for the company that runs Kenny Rogers Roasters restaurants as well as Starbucks Malaysia and Jollibean outlets in Malaysia.

It is a giant franchise in the making.

It is projected to see its compound earnings annual growth rate of 49%.

It holds franchise rights to Kenny Rogers Roasters in Malaysia, Indonesia and Cambodia, starbucks in Malaysia and Brunei and owns Jollibean worldwide – is 51% owned by Berjaya Corp Bhd. The latter

owns franchise rights to Wendy’s, Papa John’s, KRR China and Krispy Kreme – businesses could be injected into BJFood once they turn profitable.

First in the pipeline could be Papa John’s pizza in two years from Oct 2014. BJFoodwill see another earnings boost from distributing Starbucks branded products in supermarkets.

Starbucks Malaysia will overtake contributions from KRR restaurants in BJFood’s total sales going forward, upon consolidation of its numbers following the completion of its rm71.8 million acquisition of the remaining 50% of Starbucks Malaysia of Sept 18 2014.

Assuming BJFOod owns 100% of Starbucks Malaysia in FY2014, the latter should account for 67% of BJFood’s total sales, pushing KRR Malaysia’s contributions from 65% to 21.6%.

GuocaLand ... PBD Theme Play

GuocoLand (Malaysia) Bhd has 8.5 acres in PBD. This developments will benefit from the public rail transport and the offices moving from city to suburbs.

One new aspect to the growth of office space in the leafy and quiet neighbourhood of Damansara Heights is the likelihood of Hong Leong Bank moving its corporate headquarters to the area.

If this happens, GuocoLand’s Damansara City and the overall PBD area will benefit from the Hong Leong shift.

Its corporate headquarters is currently (Oct 2014) in Wisma Hong Leong, Jalan Perak, Kuala Lumpur, an 11-storey building owned by Hong Leong Assurance Bhd, a wholly-owned subsidiary of Hong Leong Financial Group.

It makes sense for Hong Leong Financial Group to demolish the building and rebuild it to its permissible plot ratio of 8. This will provide for a gross floor area of 808,000 sq ft for the new building.

The plan by the group is to redevelop the Wisma Hong Leong site. Damansara City is expected to be completed in late 2015.

The potential re-location of the headquarters of Hong Leong Bank to Damansara Heights comes as the surrounding area is set to undergo major cosmetic and structural changes. Land prices in the area have shot up and have benefited Guocoland somewhat.

On Aug 25, 2014, GuocoLand which has 8.5 acres in PBD, announced a 694% jump in its fourth quarter net profit for June 30, 2014 to RM112.32mil from RM14.14mil in the corresponding period last year.

The jump came about as a result of the company conducting a valuation exercise of its investment assets in Damansara City. The valuation involved its investment assets, not land. Hence, GuocoLand’s valuation should not be linked to land prices.

Nevertheless, that huge jump in profit in GuocoLand’s books started the ball rolling and coupled with an earlier land purchase by Lim of Malton at a whopping RM1,628 per sq ft, when it was valued for RM1,086 per sq ft, the stage was set.

Sources say Lim’s land purchases do not set the benchmark for that area simply because they are not normal market deals. Therefore, the prices he paid should not be viewed as benchmark prices because “they are not an outright market sale”.

They are not a suitable benchmark for market value per se (for that area). However, the overall story is: Will other property companies embark on annual valuation, just to book higher profits?

Sources say it may be well and good for property companies to undertake annual valuation during the good times. But what if the property market turns? Will they book losses? Already, the property market is showing signs of a slowdown, sources say.
That aside, the Damansara City land, according to sources, may have been purchased at less than RM500 per sq ft many years ago (2010). By all measures, it should be a profitable venture for GuocoLand.

However, with Desmond Lim entering the fray with his 15.84 acres, GuocoLand’s vision may be somewhat dimmed. GuocoLand’s mall may suffer because Lim holds the “entrance and exit” to his mall via the Pusat Bandar Damansara MRT station. Two malls and two hotels are being planned there, besides some serviced apartments

GBH ... Cash Rich Despite RTO Failture !!!

The RTO of Dynac was terminated. However the resolution to sell a prime 13.8 acre parcel in Jalan Segambut to Keladi Maju Bhd for rm193 million cash was passed. Tan is the substantial shareholder of Keladi with a 16.8% stake.

The disposal was initially meant to raise fresh capital for the takeover of Dynac.

The land purchase grants Keladi an instant entry into a sought after area in the capital city. It is worth noting that FCW in which Tan owns 25.5% stake, owns a few parcels next to Keladi’s newly acquired land. FCW also bought the parcels from GBH in 2007.

FCW has entered into a 50:50 JV with IJM Land Bhd to develop 16.58 acres with a GDV of rm1.3 billion. For Keladi, its parcel could have a GDV of rm1 billion.

GBH is now a cash rich company, with rm192.4 million soon to be in its coffers, which translated into rm1.03 per share. It also owns a languishing ceramic ware business.

GBH disclosed that it will be on the lookout for future O&G business opportunities as its first pick but will not discount other proposals. It did said that if GBH is not able to secure new assets, it may return part of the rm192.4 million cash proceeds to shareholders.

Malton (Key Developments For Revaluations) !!!

It had amassed projects with a gross development value (GDV) of close to RM11bil.

Its catalysts include its landbank and new phases of earnings growth.

A few key developments point to an immediate revaluation of the stock. Based on a 40% discount to its revised net asset value, Malton could be valued at RM1.81.

First of all, its RM3.5bil Bukit Jalil City project may be a turning point and key earnings catalyst moving forward. Malton’s two largest projects are Bukit Jalil and Batu Kawan Project (RM3.88bil GDV).

In Bukit Jalil, Malton has sold RM400mil worth of shop lots in that project. Of the total GDV of RM600mil for the 120 shop lots in its Bukit Jalil City project, 70% have been taken up. As the shops were launched in Jan 2014 – March 2014, earnings have already started kicking in from the fourth quarter of financial year 2014 (the April to June 2014 period).

Secondly, Malton has over RM1bil projects in the pipeline for its year ended June 30, 2015, and this will be a huge contributor to its earnings. Compared with only two new launches in FY14, FY15 will see more launches being scheduled as many projects are now ready to be rolled out after some delay.

These include the serviced apartments in Bukit Jalil and Pantai Dalam, landed houses in Ukay Spring, Kuala Lumpur and shop lots in Pengerang, Johor. Most of these will be quite sellable.

Thirdly, Malton has started streamlining its landbank to sharpen its development focus.

It recently sold two parcels of land in Sungai Long and Sungai Buloh. The selling of these two parcels will boost its FY15 earnings with a total net gain of RM52mil.

Fourthly, the company is now (Oct 2014) sitting on a RM84mil potential gain from the 187,000 sq ft of office space in Pusat Bandar Damansara which will be delivered in four years.

Although construction on the redevelopment of Pusat Bandar Damansara (PBD) has yet to start, the 187,000 sq ft of office space assigned to Malton by Johor Corp (as part of the settlement for PBD land between JCorp and Tan Sri Desmond Lim) is now (Oct 2014) worth RM224mil based on a market value of RM1,200 psf.

This suggests a potential 60% gain of RM84mil on top of the RM140mil that the company booked as investment asset.
For the fourth quarter to June 30, 2014, Malton’s net profit was down 46.5% to RM8.64mil on the back of a 21.45% drop in revenue to RM102.16mil. The drop in profit and revenue were due to higher billings and profit recognition from the completion of Amaya Maluri project in Kuala Lumpur and Mutiara Residence project in Penang.

The construction and project management division also declined due to lower billings as a result of the recent completion of the Jaya 14 project.

For the full year to June 30, 2014, Malton recorded a 46.47% increase in net profit to RM51.83mil on the back of a 39.29% jump in revenue to RM500.3mil.

TTHEAVY ... PMB now a substantial shareholder

It has PMB on board for its first tranche of shares placement which it had proposed to undertake a private placement of up to 10% of its issued and paid up capital of 125.81 million new ordinary shares.

PMB has agreed to subscribe 52.8 million placement shares or 5% of its share capital at rm0.80 per placement share.

For subsequent tranches, the placement shares would not be priced lower than rm0.25 which is the par value of the shares.

Based on the indicative issue price of rm0.80, the proposed exercise is expected to raise up to rm100.65 million of which rm96.9 million will be used for working capital.

Assuming a full exercise of 202.18 million outstanding warrants and proposed private placement, THHEAVY’s proforma share capital, is expected to rm345.98 million from rm255.2 million. Its net asset per share will jump to rm0.43 while gearing falls to rm0.50 times.

Additionally, stakes of LTH and GuoLine Capital Ltd will be reduced to 28.81% and 4.69%.

The EPS of the group should be correspondingly diluted from the increase in shares pursuant to the proposed private placement.

Sasbadi ... Market Leader In Domestic Educational Publishing Industry

It is a strong and growing market leader in the local educational publishing industry with 9% market share.

With the proceeds from its IPO, the group is in prime position to embark on earnings accretive M&As in the fragmented educational publishing industry. There is huge potential in the untapped education services market, in hands on learning centres that foster creative thinking and innovation, where Sasbadi could tap into.

Observers forecast its financial year of 2015 to 2017 core profit after tax to expand at three year CAGR of 22% underpinned by earnings accretive M&As. Valuation is at 11x/9x/7x FY2015 to FY2017 EPS.

A target price of rm2.25 implies 16 times FY2015 EPS…