Selangor Dredging Berhad (SDB)

General Review

Selangor Dredging Berhad, established by the late Mr. Teh Kien Toh in 1962 continues to draw the market attention after a recent price and volume spike. Under the leadership of his daughter, Ms. Teh Lip Kim as a Managing Director (MD), SDB continues to move forward, seeking to be one of the top property players in the market.

Business Model 

Selangor Dredging Berhad businesses are diversified into few segments, which are property development, property Investment, hotel operation, and investment holding.

Financials

(Source: malaysianstock.biz)

(Source: klse.i3investor)

-SDB has been recording a healthy Revenue Growth of 518% in 10 years (61 million to 377 million)

-A steadily increasing profit attributable to shareholder of 785% in 10 years (7.8 million to 62 million)

- A growing Earning-Per-Share of 692% in 10 years (1.84 cents to 14.59 cents)

- Total Asset of Rm1.29 Billion, Total Liability of Rm580 Million and Total Equity of Rm643 Million

-Looking at the recent 2 quarter, SDB manage to breakthrough more than Rm100 million of revenue per quarter suggesting that the company has captured a breakthrough in their business as time passes. Looking into the Total Liability of Rm580 Million, which comprises of (345m secured loan, 180m revolving credit, 55m unsecured loan) which is mostly use in their project development and working capital, I shall say, it falls into the category of healthy debt.

-On the other side, operation of Hotel Maya Kuala Lumpur (which worth Rm150 Million) by SDB, continue to contributes approximately 20-27 million revenue annually to the group making a comfortable stand for SDB. With the full ownership in Wisma-Selangor-Dregging which is worth Rm277 Million, SDB will be standing perfect for those who prefer safe investment.

  Hotel Maya Kuala Lumpur

Wisma Selangor Dredging 

List of SDB ongoing project (Malaysia) -By the sea (Batu ferenggi Penang) GDV Rm230 million -Windows of the park (Cheras) GDV Rm523 million  -Laman & Bayu (Puchong) GDV Rm107 million -The Hub (SS2) GDV Rm337million -SqWhere (Kota Damansara) GDV Rm630 million (Source: sdb.com.my) (Singapore) -Village (Pasir Panjang) GDV SGD 260m (or Rm663 million) -Hijauan on Cavenagh (District 9) GDV SGD 55m (or Rm140 million) -OKIO (Balestier Road) GDV SGD 102m (or Rm260 million) (Source: sdb.com.my) Valuation -Current Rm2.89 billion worth of project being carried out with the estimated project year range of 2013-2017 (5 years) - Taking a minimum of 15% of Net profit margin of the total ongoing project of Rm2.89 billion, it sums up to be Rm433 Million -Rm433 Million earning ÷ 426million total share outstanding = Rm1.01 cents earning ÷ 5years (project range) = 0.20cents annually -Assume it's trading at 8 to 10 times fair PE, it will be trading at Rm1.60-Rm2.00 Discounted EPS Method -2014 EPS 14.59 cents With the estimated minimum 10% growth of EPS for the upcoming years, Using 10years Discounted Earning Per Share Method -Intrinsic value Rm2.06 NTA - SDB is trading at Rm1.10 (50% discount of its NTA which is at Rm1.65) (Source: bursamalaysia.com) Technical  -SDB has been looking to challenge it's resistance at 1.15 (Source: ChartNexus) -Short-Term Target Price Rm1.30 -Long-Term Target Price Rm1.70