Mitrajaya - Back On Growth Path ?
Author: Icon8888 | Publish date: Fri, 2 May 21:27As mentioned in one of my previous articles, one of my favorite investment theme is contstruction companies that grew by venturing into property development.
After convering Ken, Encorp and Gadang, Mitrajaya seemed to be another company that fits into that category and worth a closer look.
1. Background Information
Based on 398 mil shares outstanding and share price of RM0.76, market cap is RM302 mil.
The group has net assets of RM350 mil, loans of RM81 mil and cash of RM19 mil. Net gearing is 0.18 times only.
The group reported net profit of RM29 mil in FY2013. PE multiple is 10.4 times.
(Mitra share price over past two years)
(Mitra-WC share price over past six months)
2. Landbank
The group has 450 acres of land (154 acres in South Africa).
Out of 450 acres, 63.8 acres are located at prime locations (yellow highlighted) with net book value of RM134 mil.
The landbank should be sufficient to last the group at least another four, five years.
| Area | NBV | |||
| Location | Description | (acres) | (RM mil) | Year |
| Kampung Seri Aman Dalam, Puchong | residential land | 2.0 | 1.1 | 2007 |
| Setapak, KL | commercial land | 7.2 | 17.5 | 1999 |
| Pengerang, Johor | development land | 10.8 | 4.9 | 1996 |
| Kampung Seri Aman Dalam, Puchong | ongoing development | 19.5 | 45.4 | 2004 |
| Kampung Seri Aman Dalam, Puchong | vacant land | 4.3 | 3.5 | 2004 |
| Serendah, Selangor | 309 parcels of land | 9.3 | 4.9 | 2006 |
| Melaka Tengah | 92 parcels of land | 17.5 | 28.4 | 2006 |
| Serendah, Selangor | industrial land | 7.1 | 4.9 | 1997 |
| Mukim Petaling | industrial land | 9.3 | 42.0 | 2009 |
| South Africa | on going development | 154.4 | 26.8 | 2006 |
| Puchong Perdana, Selangor | development land | 10.7 | 19.5 | 1999 |
| Kuala Langat, Selangor | development land | 198.0 | 29.0 | 2007 |
| 450.1 | 227.9 |
3. Historical Profitability
Mitrajaya did well in 2010 and 2011, which saw its market cap balloon substantially. However, in 2012 and 2013, the group's net profit has declined due to the following reasons :-
(a) drop in property development revenue, from RM136 mil in FY2011 to RM80 mil in FY2012. Even though rebounced in FY2013 to RM105 mil, it is still lower than 2010 and 2011.
(b) substantial drop in profit margin for construction division from 20% to 8%.
| FY2010 | FY2011 | FY2012 | FY2013 | ||
| Revenue (RM mil) | |||||
| Construction | 147.5 | 142.3 | 160.0 | 215.8 | |
| Property development | 155.3 | 136.3 | 80.2 | 105.0 | |
| Others | 24.8 | 55.5 | 45.0 | 42.3 | |
| 327.6 | 334.1 | 285.2 | 363.1 | ||
| Operating profit (RM mil) | |||||
| Construction | 32.2 | 27.2 | 12.6 | 14.5 | |
| Property development | 46.2 | 34.4 | 17.8 | 20.9 | |
| Others | 6.47 | (1.5) | (1.4) | 6.0 | |
| 84.9 | 60.1 | 29.0 | 41.4 | ||
| Profit margin (%) | |||||
| Construction | 21.8 | 19.1 | 7.9 | 6.7 | |
| Property development | 29.7 | 25.2 | 22.2 | 19.9 | |
| Others | 26.1 | (2.7) | (3.2) | 14.1 | |
| Net profit | 49.9 | 40.8 | 17.9 | 29.3 | |
4. Development Projects
In October 2012, the group launched its 11 blocks of 280 units 6 storey duplex apartments with GDV of RM330 mil at Puchong Prima. This project is likely to be the major profit contributor to property division over the next two years.
According to FY2012 annual report, the group has also submitted development order application for the following two projects with GDV in excess of RM1 billion :-
(a) 3 bocks of high rise condos in Wangsa Maju located opposite Wangsa Walk Shopping Mall with nearby LRT facilities; and
(b) mixed development for a new township on 180 acres of land in Banting, Selangor.
(Duplex project (280 units) in Puchong Prima with GDV of RM330 mil)
(The Duplex project is low density)
5. Recently Secured Construction Contracts
Over the past 6 months, the group secured RM706 mil contracts :-
(a) RM278 mil contract from UEM Sunrise for building works at Cyberjaya. Target to complete by August 2016 (29 months).
(b) RM428 mil contract from Putrajaya Holdings Bhd for construction of office buildings for Suruhanjaya Pencegah Rasuah Malaysia. Target completion by December 2016
This works out to be average of RM282 mil per annum (for comparison purpose, in FY2013, construction division reported revenue of RM216 mil).
6. Concluding Remarks
(a) Mitrajaya has strong balance sheets. However, it has not done well in the past two years due to factors as mentioned in (3) above.
(b) however, in latest quarter, its net profit jumped to RM13.5 mil, which is considered a breakout from past two years' depressing pattern (average RM7 mil per quarter).
It is difficult to say whether next few quarters the group can continue to deliver strong performance. We can only tell when the results is released by end of May to have a better feel of its momentum for 2014.
(c) Having said so, it seemed that its two major divisions (construction and property development) might be able to do well over next two years.
The property division should start benefiting from the Duplex project in Puchong Prima rolled out in October 2012 with GDV of RM330 mil (3 times FY2013 property revenue).
Its construction division has recently secured RM706 mil which should keep the group busy over next two years.
(d) Mitrajaya share price has been quite strong recently, rising from around 55 sen to 76 sen within short few months. Maybe there is some interesting corporate development in the works.
Let's wait and see what transpires.
Have a nice evening.
On our portfolio - Adding MITRA into our Dividend Yield Portfolio
Author: kiasutrader | Publish date: Tue, 6 May 09:45
We are adding 25,000 Mitrajaya (MITRA) @ RM0.75 per share to our Dividend Yield Portfolio. We believe MITRA’s earnings have reached an inflection point after
its core net profit (netting off the RM4.2m land disposal gain in
Rawang) grew significantly by 40% to RM25.1m in FY13, driven by its
construction and property divisions. On top of its strong order book of
RM1.2b (3.3x to FY13 revenue), the group also tender another RM1.75bof
work, of which management has a strong confidence to secure at least
RM300m this year.
Meanwhile, MITRA also targeting to launch a property project in Wangsa Maju this year, which comprise of 3-blocks of luxury condominiums with an estimated GDV of RM650m. We believe this project will achieve strong take-up rates due to its strategic location (next to Sri Rampai LRT station and Wangsa Walk Mall).
All in all, we forecast the group’s net profit to grow by 52% and 31% in FY14 and FY15 to RM38.3m and RM49.9m, respectively. The group's earnings growth is based on the following assumptions: (i) orderbook burn rate of 33%-35%, (ii) new contracts assumption of RM300m per annum, (iii) unbilled sales of around RM80m coupled with expected new sales of RM50m-RM115m in FY14-FY15.
We believe MITRA is one of the jewels in the construction and civil engineering sector. We have a fair value of RM1.13 for MITRA, based on a targeted 9x fwd-PER on FY15 earnings. TRADING BUY.
MITRA has been trading on a nice uptrend following a decisive breakout from the “Symmetrical Triangle” chart pattern. Short term trend of MITRA remained bullish as it stays above all the short, mid and long term moving averages. Despite the sharp rise in share prices over the past few months, the technical picture has yet to show signs that momentum is waning. Therefore, we suspect that MITRA could extend its rally to close up the gap at RM0.87 fairly soon. Should this resistance be taken out as well, MITRA should move higher to retest the next price target at RM1.00.
Source: Kenanga
Meanwhile, MITRA also targeting to launch a property project in Wangsa Maju this year, which comprise of 3-blocks of luxury condominiums with an estimated GDV of RM650m. We believe this project will achieve strong take-up rates due to its strategic location (next to Sri Rampai LRT station and Wangsa Walk Mall).
All in all, we forecast the group’s net profit to grow by 52% and 31% in FY14 and FY15 to RM38.3m and RM49.9m, respectively. The group's earnings growth is based on the following assumptions: (i) orderbook burn rate of 33%-35%, (ii) new contracts assumption of RM300m per annum, (iii) unbilled sales of around RM80m coupled with expected new sales of RM50m-RM115m in FY14-FY15.
We believe MITRA is one of the jewels in the construction and civil engineering sector. We have a fair value of RM1.13 for MITRA, based on a targeted 9x fwd-PER on FY15 earnings. TRADING BUY.
MITRA has been trading on a nice uptrend following a decisive breakout from the “Symmetrical Triangle” chart pattern. Short term trend of MITRA remained bullish as it stays above all the short, mid and long term moving averages. Despite the sharp rise in share prices over the past few months, the technical picture has yet to show signs that momentum is waning. Therefore, we suspect that MITRA could extend its rally to close up the gap at RM0.87 fairly soon. Should this resistance be taken out as well, MITRA should move higher to retest the next price target at RM1.00.
Source: Kenanga
Mitrajaya Holdings Bhd - Earnings Reached Inflection Poin
Author: kiasutrader | Publish date: Tue, 6 May 09:31
- Mitrajaya’s earnings have reached an inflection point after
its core net profit (netting off the RM4.2m land disposal gain in
Rawang) grew significantly by 40% to RM25.1m in FY13, driven its
construction and property divisions. According to the management, its
orderbook has reached its all-time high of RM1.2b (3.3x to FY13
revenue), 140% higher than that of its previous historical high of
RM500m. As for its property division, there is RM80m locked-in sales,
which will be recognised this year and about RM146m ready stock yet to
be sold. Based on our conservative analysis, we forecast Mitrajaya’s
core earnings could at least report high double digit net profit growth
of 52% and 31% in FY14 and FY15. This is substantially higher than that
of our construction universe’ aggregate FY14-FY15 earnings growth
forecast of 16%-9%.
- Tenderbook of RM1.75b, targeting to win at least RM300m this year. Tenderbook includes: Petronas RAPID project (RM600m), building works for Ikano Cochrane (RM350m), infra projects for ECERDC (RM300m), building works for Bandar Setia Alam (RM300m), and building works for Putrajaya (RM200m). The management expects to win at least RM300m this year and that, we believe, will be coming mainly from building works in Putrajaya and other infra projects. Note that Mitrajaya has established a long-term relationship (10 years) with Putrajaya Holdings through its excellent project delivery track record. The latest project they secured with Putrajaya Holdings Bhd was the RM427m MACC Building last year. With this track record and background, we believe Mitrajaya is well-placed to win more contracts from Putrajaya.
- Key catalyst for property division: Wangsa Maju. Mitrajaya will be launching a property project comprising 3-blocks of luxury condominiums in Wangsa Maju starting 4Q2014. Total GDV for the whole project is estimated at RM650m and it is located right opposite Wangsa Walk Mall and is only 150m away from Sri Rampai LRT station. Despite the property cooling measures, we believe this project will achieve strong take-up rates due to the strategic location. According to the management, 1st phase of the project will be around RM200m and we expect this project to contribute significantly from FY16 onwards.
- Other businesses to support earnings growth. We understand Mitrajaya has other businesses, including (i) a 51% stake in Optimax Eye Specialist Sdn Bhd, one of the largest optical companies in Malaysia and (ii) 152 acres of bungalow vacant lots and 18-hole golf course in South Africa. The former contributes about close to RM1.0m last year while the latter contribute about RM5.0m last year mostly through land sales. We expect at least it could maintain the same quantum of last year’s profit through land sales. We believe these two divisions will likely continue to support its earnings growth in the foreseeable future.
- Forecasts. We forecast its net profit to grow by 52% and 31% in FY14 and FY15 to RM38.3m and RM49.9m, respectively. The earnings growth is based on the following assumptions: (i) orderbook burn rate of 33%-35%, (ii) new contracts assumption of RM300m per annum, (iii) unbilled sales of around RM80m coupled with expected new sales of RM50m-RM115m in FY14-FY15.
- Fairly valued at RM1.13, TRADING BUY. We reckon that this under researched stock, Mitrajaya, is one of small-cap stocks with good growth prospect that worth considering given its visible earnings growth prospects. At current price, Mitrajaya appears very cheap as it is only trading at Fwd-PER15 of 6.0x against its small-cap peers average Fwd-PER of 8x-10x. Benchmarked at 9x fwd-PER on FY15 earnings, Mitrajaya is fairly valued at RM1.13. TRADING BUY, as the stock offers 50% potential upside.
Source: Kenanga
- Tenderbook of RM1.75b, targeting to win at least RM300m this year. Tenderbook includes: Petronas RAPID project (RM600m), building works for Ikano Cochrane (RM350m), infra projects for ECERDC (RM300m), building works for Bandar Setia Alam (RM300m), and building works for Putrajaya (RM200m). The management expects to win at least RM300m this year and that, we believe, will be coming mainly from building works in Putrajaya and other infra projects. Note that Mitrajaya has established a long-term relationship (10 years) with Putrajaya Holdings through its excellent project delivery track record. The latest project they secured with Putrajaya Holdings Bhd was the RM427m MACC Building last year. With this track record and background, we believe Mitrajaya is well-placed to win more contracts from Putrajaya.
- Key catalyst for property division: Wangsa Maju. Mitrajaya will be launching a property project comprising 3-blocks of luxury condominiums in Wangsa Maju starting 4Q2014. Total GDV for the whole project is estimated at RM650m and it is located right opposite Wangsa Walk Mall and is only 150m away from Sri Rampai LRT station. Despite the property cooling measures, we believe this project will achieve strong take-up rates due to the strategic location. According to the management, 1st phase of the project will be around RM200m and we expect this project to contribute significantly from FY16 onwards.
- Other businesses to support earnings growth. We understand Mitrajaya has other businesses, including (i) a 51% stake in Optimax Eye Specialist Sdn Bhd, one of the largest optical companies in Malaysia and (ii) 152 acres of bungalow vacant lots and 18-hole golf course in South Africa. The former contributes about close to RM1.0m last year while the latter contribute about RM5.0m last year mostly through land sales. We expect at least it could maintain the same quantum of last year’s profit through land sales. We believe these two divisions will likely continue to support its earnings growth in the foreseeable future.
- Forecasts. We forecast its net profit to grow by 52% and 31% in FY14 and FY15 to RM38.3m and RM49.9m, respectively. The earnings growth is based on the following assumptions: (i) orderbook burn rate of 33%-35%, (ii) new contracts assumption of RM300m per annum, (iii) unbilled sales of around RM80m coupled with expected new sales of RM50m-RM115m in FY14-FY15.
- Fairly valued at RM1.13, TRADING BUY. We reckon that this under researched stock, Mitrajaya, is one of small-cap stocks with good growth prospect that worth considering given its visible earnings growth prospects. At current price, Mitrajaya appears very cheap as it is only trading at Fwd-PER15 of 6.0x against its small-cap peers average Fwd-PER of 8x-10x. Benchmarked at 9x fwd-PER on FY15 earnings, Mitrajaya is fairly valued at RM1.13. TRADING BUY, as the stock offers 50% potential upside.
Source: Kenanga
Palm oil/Vegoils: Market factors to watch May 6 (Tuesday)
KUALA LUMPUR: The following factors are
likely to influence Malaysian palm oil futures and other vegetable oil
markets on Tuesday.
FUNDAMENTALS
*
Malaysian palm oil futures ended lower on Monday, stretching losses
into a fourth straight day, as investors waited for an official report
on export demand and stocks of the tropical oil in the world's
second-largest producer.
* U.S. wheat futures
jumped nearly 2 percent on Monday as scorching temperatures in the
southern Plains deepened fears about weather damage to the U.S. hard
red winter wheat crop.
* Brent crude oil fell
by more than $1 a barrel on Monday, pressured by reports that China's
manufacturing sector contracted and Libya's oil output was recovering.
MARKET NEWS
*
Asian share markets shuffled higher on Tuesday after promising U.S.
economic news helped Wall Street to a firmer finish, though activity
was again light with Tokyo still on holiday.
*
Commodities had the best quarter in 18 months as trading for March
ended on Monday, with weather and economic growth likely to determine
if gas, gold, grains, lean hogs and coffee continue going higher and
draw money into the space.
RELATED
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> Gold near 3-week high as Ukraine fighting boosts safe-haven bids
> Mexico cites major interest in oil reform, including from China
> Citi Q1 commodities revenue almost doubles as polar vortex hits
> Venezuela's Palito refinery catcracker halted due to fault-source
> Exxon says minimum production impact due to issue at Beaumont refinery
> Italy could boost Africa gas imports to offset Russia
> Brazil's São Martinho cane group acquires Santa Cruz DATA/EVENTS
> Cargo surveyor Intertek Testing Services to release Malaysia's May
1-10 palm oil export data on May 10. Another cargo surveyor Societe
Generale de Surveillance to release data for same period on May 12.
>
Industry regulator the Malaysian Palm Oil Board (MPOB) to release data
on Malaysia's end-April palm oil stocks, exports and production on May
12.
Palm, soy and crude oil prices at 0042 GMT
| Contract | Month | Last | Change | Low | High | Volume |
| MY PALM OIL | MAY4 | 0 | +0.00 | 0 | 0 | 0 |
| MY PALM OIL | JUN4 | 0 | +0.00 | 0 | 0 | 0 |
| MY PALM OIL | JUL4 | 0 | +0.00 | 0 | 0 | 0 |
| CHINA PALM OLEIN | SEP4 | 0 | +0.00 | 0 | 0 | 0 |
| CHINA SOYOIL | SEP4 | 0 | +0.00 | 0 | 0 | 0 |
| CBOT SOY OIL | JUL4 | 41.09 | -0.09 | 41.07 | 41.17 | 684 |
| NYMEX CRUDE | JUN4 | 99.45 | -0.03 | 99.32 | 99.50 | 828 |
Source : The Star
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