Ivory ... Why Its Share Price Is Underperforming?

A Penang based developer teamed with Aspen Vision Development Sdn Bhd to ink a purchase and development agreement with PDC for an rm8 billion, mixed development project on 98ha of freehold land in Bandar Cassia, Batu Kawan over the next decade. Ivory owns a 49% stake in the JV company with Aspen Vision.

In addition, the parties sealed a partnership with Ikano Pte Ltd to jointly develop an integrated regional shopping centre there.

It also announced another development in JB, its first project off home teaming with JB Lee Properties Sdn Bhd, the development at Plentong will be spread over 2.84ha to 3.56ha and have a GDV of rm2 billion.

Nevertheless, industry observers say investors could be waiting for the sidelines for the release of salient terms pertaining to the two JV exercises. So far, critical information such as the cost of structure of the projects has not been made publicly available.

Its officials said that more information will be released once details have been made.

As for the Johor project, the execution of the agreement depends on approval from the authorities for land conversion and ascertaining a final land size.

Industry are also concerned about Ivory’s financial muscle for the two mega projects given its current cash hoard of rm35 million as well as total liabilities of rm489 million as at June 30 2014. Its debt to equity ratio decreased to 1.24 times for the period.

The group needs to raise cash from the market in future in view of its stretched gearing.

In addition, its net gearing of 0.7 times as of June 2014 is higher than the 0.5 time industry average.

This also explains why the group favors JVs with other developers for future projects.