Sunday, April 03, 2011

On the Right Track

Malaysians will readily tell you that one of the most prime plots of real estate in KL is in Damansara locality. The area has also received a further boost with the government's plans to put up a MRT line through the locality.

One of the prime beneficiaries of the above developments is Selangor Properties (SP), a sleepy KLSE listed company (current price of RM4.20) with a substantial land bank in Damasara.

SP owns about 20 acres of land adjacent to the proposed MRT Blue Line Pusat Bandar Damansara station. Future projects is likely to be integrated with the station, thereby increasing attractiveness and consequently, its selling price.

SP also has a strong balance sheet with a net cash position of about RM200 million (RM0.58 per share). This is because it has a strong recurring cash flows from being a landlord of assets such as the 25 storey Menara Millenium. The capital values of these assets (including Wisma Help, Kompleks Pejabat Damansara) should also increase in future when the MRT stations are completed. These assets are located in close proximity to the Pusat Bandar Damansara and Sematan stations.

SP had been able to consistently grow its book value per share in the last five years. Its last report BV per share is RM5.11. A broker has issued a report on SP in March 2011 titled "Sitting on a Gold Mine". The analyst's estimated RNAV per share is RM7.31 per share.

The group also intends to launch its high end Batai project in the second half of 2011. Strong pre-sales could be a catalyst for price to move closer to BV of RM5.11 per share. Its major shareholder Kayin Holdings obviously sees value as it raised its stake from 61% to 66% recently. A take out by Kayin cannot be ruled out due to the past failed privatization attempts on the group.

Hence, with the numerous catalysts above, this sleepy company may well have its day in the sun soon!



Blogger NVI said...

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Keep up the good work!

11:56 PM  

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