Land & General Berhad

General Review

On a recent “penny-frenzy” packed with “volume-insanity” in the market tends to draw a quick attention and draft some question mark on a possible outlook of the market. Risk-Taker forever punts more and the most, Risk-Neutral stay sideways and Risk-Adverse tend to shy away from the market. Despite of all and all super-duper superstitious analysis, belief and stories on the market condition, there is one laggard property counter that continues to draw my attention. Overwhelmingly Undervalued, Land & General Berhad has gone through a major restructuring, a successful turn-around under a leadership of Mr. Low Gay Teck (Managing Director), also a former MD of Mayland group.

Business Model

Land & General Berhad is a Malaysia-based company engaged in investment holding and leasing of assets. The Company, along with its subsidiaries, operates in three segments: property, which include investment, management and development of residential and commercial properties; education, which include operation of co-education schooling from kindergarten to secondary education, and others, which include investment holding, land cultivation, management of club activities and dormant companies

Financials

(Source: malaysiastock.biz)

(Source: klse.i3investor.com)

Latest Annual Audited Account 2014

-Looking at the latest Income-Statement, Revenue grew almost 127% in FY2014, and the group achieve 125% growth in net income or translated into 12.29 cents (basic EPS) and 8.6 cents (fully diluted EPS). A huge breakthrough in term of Revenue, Profit and Earning Per-Share.

-Looking deeper into the Balance-Sheet, the group stands on a NET-CASH position, with total cash of RM183 million or RM0.30 cents CASH-PERSHARE

-Total borrowing of only RM20 million approximately a 70% decrease in borrowing as to compared to FY2013

-Total Asset of RM742 million, Total Liability of RM196 million & Total Equity of RM545 million

-Retained Earning of RM245 million which is qualified to issue Bonus 3 for 1

-NTA of RM0.76 Pershare

-L&G unbilled sales of RM600 million

Upcoming Catalyst

-Entire 4 phase of development of Damansara-Foresta which is located nearby Bukit-Lanjian Forest Reserve which will be launched separately. Currently L&G will be launching (2^nd Phase) with a total GDV of RM800 million

-Upcoming 2^nd launching of The-Element Ampang tower (join-venture with Mayland Sdn.Bhd) with a combined GDV of RM788 million

-L&G plans on conversion of 200 acre of golf resort into a residential township in Tunku Jaafar, Seremban with a projected GDV of RM550 million to be launched next year.

-L&G is currently in talk with several owners of prime land in Klang Valley to acquire land or a joint development with a potential GDV of RM1 billion

-L&G to convert its 2492 Acre (1009 Hectares) of Rubber plantation and Oil palm land in Ladang Sungai Jernih, Kerling Hulu Selangor which they bought many years ago at RM0.44 per-square feet or RM19,000 per-acre  into residential development. Once conversion is done, this piece of land value will easily touch up to RM5 per-square feet or RM217,000 per-acre RNAV.

 The land is located somewhere nearby Lebuhraya-Utara-Selatan

-RM217,000 per-acre X 2492 Acre = RM540,764,000

-RM540,764,000 / 612,732,000 (share outstanding) = RM0.88 per-share

(Source: themalaysianreserve.com)

With the total of worth of RM3billion GDV in pipeline, L&G will be busy for the next 6 years. Average benchmark of 20% profit margin after tax of average property company, L&G will be looking for annually RM100 million Net-income, channelling to 612 million of share outstanding which Is around RM0.16 cents per-share. Assume it is trading at a 8-10 times fair P/E ratio, it will be valued at RM1.28-RM1.60

-L&G is on a nice uptrend, Support is at 0.620 while resistance is at 0.685

-Short-Term Target price RM0.90

-Long-Term Target price RM1.60