Property stocks doing well

Property stocks doing well
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Property gains tax waiver, multi-billion ringgit project aid growth

By IZWAN IDRIS

PETALING JAYA: Property developers reported healthy growth for the period ended June 30, thanks to higher demand for assets in choice locations after the Government waived real property gains tax effective April 1 and launched an ambitious multi-billion ringgit redevelopment project in Johor.

Mah Sing Group Bhd and YNH Property Bhd churned out double-digit increases for the first half of their respective financial years, which met analysts’ already high expectation.

The upside surprise, however, came from smaller sized Plenitude Bhd.

The firm, which has a market value of RM400mil as at yesterday, capped off its sixth year of consecutive net profit rise with a strong performance in the last quarter.

For the year just ended (FY07), Plenitude reported a 7.8% rise in net profit to RM56.5mil, or 41.8 sen per share, on revenue of RM238.2mil.

RHB Research Institute yesterday upgraded its target price for Plenitude to RM5.08. It valued the company at 11 times to its revised profit projection in calendar year 2008.

Analysts also noted Plenitude’s solid balance sheet, backed by RM43mil cash, or 32 sen per share, as at end-June.

Recent land disposal in Johor would add RM56mil, or 41.4 sen per share, to its cash pile.

Plenitude’s Desa Tebrau project just outside Johor Baru is “the company’s juiciest story for growth,” OSK Investment bank said yesterday.

The recent entry of IKEA would add to the appeal of the township, which is already home to large retailers like Jusco and Tesco.

“The township offers the most commercial and investment sense in the Iskandar Development Region (IDR), in our view,” it said.

The 966-acre Desa Tebrau has an undeveloped landbank of 649 acres.

The stock was up 7 sen to RM2.95 yesterday.

Meanwhile, Mah Sing’s strong second quarter results continued to impress analysts. The counter was made even more attractive following the sharp price pullback in recent weeks.

“We continue to like Mah Sing in view of its unique business model, hands-on management and short turnover cycle,” SJ Securities said yesterday.

Five brokerages, including Macquarie Research and Deutsche Bank, put their fair value on the stock at between RM2.64 and RM3.15 in their latest updates.

Analysts predicted that Mah Sing’s earnings for the year ending Dec 31 (FY07) at around 15 sen per share and about 19 sen per share in FY08.

Shares in Mah Sing closed 2 sen lower at RM1.94 yesterday. It hit a record high of RM2.46 on July 31, post adjustment for bonus issue and share split exercises.

Another mid-sized player YNH Property saw its first half ended June 30 net profit jump to RM43.3mil versus RM34.6mil a year ago.

Consensus estimates projected that its full year net earnings would reach RM90mil, or about 25 sen per share.

At its closing price of RM2.48 yesterday, the stock was valued at 10 times its projected earnings for the year and a sharp discount to its revised net asset value of RM4.34.

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