Can L&G sustain its growth rate?

Author: lkoky   |   Publish date: Tue, 26 Aug 21:20

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As I am writing this article, L&G just closed at RM0.63 on 26-Aug-2014. The all time highest was RM0.70 achieved on 4-Aug-2014.

So the question now is how high can the share price go.

Before answer that question lets look at where L&G revenue/profit contribution from. In 2013 annual report, 90% of PBT were from properties development segment.







And its current projects include:

• 8trium, Bandar Sri Damansar. Completed 1H 2014.
• The Element@Ampang, two 42 storeys tower comprises 1040units. GDV RM760million. Scheduled for completion in 2Q 2014.
• Damansara Foresta, Bandar Sri Damansara, total GDV >RM2billion; Phase I launched in 2012, targeted to completed in 3.5years. As of 1H-2014, Phase I close to 90% of the 928 units (four residential tower blocks) have been taken up. Construction is aapprox 20% completed.selling price per units range from 900k to 1.2million. Hence total GDV for Phase I is around RM900million.
• Tuanku Jaafar Golf and Country Resort, upmarket residential in Negeri Sembilan. Launched 1H 2014
• Hidden Valley, Melbourne. No GDV or schedule provided in annual report.

And 1Q-2015 Financial results
 


 


 So we know that close to 75% of the profit in 1Q-2015 was contributed from Elements@Ampang, which is scheduled to be completed 1H-2014. Hence it is safe to assumed that subsequent quaters financial results will be driven mostly by Damansara Foresta, Phase I, II and TJGC projects with GDV >RM2billion.

Now the guestimation begin:

75% of 1Q-2015 from Element@Ampang = RM44.78million of operation profit. And this if from a 50% JV porject with Mayland.

Let assumed that 2Q-2015 will be mainly contributed from Foresta project which is 100% owned by L&G.  RM900million/3 years/4 quaters = RM75million revenue. With L&G passed recorded of achieving profit margin of 30%, the above revenue will translate into RM22.5million profit per quarter for subsequent 3 years.

Of cuz this is the profit contribution from Foresta Phase I alone. Havent take into consideration of lauching of Foresta Phase II, TJGC, Melbourne project and Education & Others.

And lastly, the management definitely seems confident in maintain the current upward trajectory of the company revenue/profit growth; in spite of the rising OPR and coming GST in 2015,