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Author: Tan KW | Publish date: Wed, 18 Feb 17:11
Land & General (L&G) (Fundamental: 3/3, Valuation: 3/3) is one
of Malaysia’s oldest property companies, and is synonymous with the
development of Bandar Sri Damansara. The company was badly hit during
the 1997-98 Asian financial crisis, and spent the next decade
restructuring its debts.
These restructuring efforts have since borne fruit. After several years
of large losses, L&G has been consistently profitable since FY
March 2006. From FY2010 onwards, its financial performance improved
significantly as a strengthened balance sheet, the entry of new
substantial shareholders (the Mayland Group) and the property market
boom gave rise to increased launches.
In FY2014, L&G’s revenue increased more than two-folds to RM491.9
million while its net profit jumped 71.3% to RM75.3 million. For 1HFY15,
revenue grew 58.1% to RM363.5 million y-o-y while net profit rose
168.2% to RM89.9 million.
Its ongoing Elements@Ampang and
Damansara Foresta projects are near completion and have locked in over
90% sales. Going forward, the company plans to launch projects worth RM2
billion in the medium term, comprising serviced apartments adjacent to Elements@Ampang, Damansara Foresta Phase 2 and Tuanku Jaafar Homes.
While the property market is soft, L&G’s existing projects are well
located in matured areas. Looking much further out, it has about 2,500
acres in Lembah Beringin, north of Bukit Beruntung and Rawang.
L&G has a solid cash-rich balance sheet. As at 1HFY2015, net cash
stood at RM360.1 million, equivalent to 34 sen per share or nearly
two-third of its current share price of 52.5 sen. The company started to
pay dividends in FY2014, amounting 2 sen per share or a yield of 3.8%.
L&G is trading 7.9% below its September 2014 book value of 57 sen
with a trailing 12-month P/E ratio of 4.2 times. However, investor
should note that there are 145.9 million of ICULS outstanding, which if
converted could potentially dilute earnings and net assets by 14%.
This article first appeared in The Edge Financial Daily, on February 18, 2015.
http://www.theedgemarkets.com/my/article/insider-asia%E2%80%99s-stock-day-land-general
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