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RM3.90 today, RM4.85 near future and 300% up in profits.

Posted in Property, KL / Selangor

How many listed companies in BURSA can claim to have a 300% increase in net profit? Not many if you look around. In fact for banks, if they can grow by 20%, that’s like a record. MKH Berhad did just that. It’s net profit for Quarter 2 ended March 31 increased 300%. This was contributed by both its property development and oil palm plantations divisions. There’s however an additional announcement too. Part of the profit was due to the inclusion of an unrealised foreign exchange gain of RM29.4 million due to the stronger Indonesian Rupiah. 

For the development side, the contribution was due to higher percentage of revenue recognition from ongoing projects like Pelangi Semenyih 2, Hill Park Home, Saville@Melawati, Pelangi Seri Alam, Saville@the Park, Bangsar, Mewah 9 Residence, Kajang 2 and MKH Boulevard, and newly-launched projects like Hill Park Shah Alam, Pelangi Heights and Kajang East. More importantly, the unbilled sales as at 31 March 2014 is RM601.8 million.

mkhMore importantly, the group plans to launch many new developments with a GDV of RM1.4 Billion and 50% are expected to be launched in the second half of the year. That’s anytime now. Some of the upcoming launches include mixed residential Hillpark Home 3 and Saville@Kajang located near the upcoming MRT station. Besides these residential ones, there’s also a new commercial development, MKH Avenue II as well as new phases of ongoing projects Kajang East, Pelangi Heights, Hillpark@Shah Alam North and MKH Avenue I.

Thinking of buying in areas which are growing instead of already way too popular areas? I think there are quite a few MKH projects which falls into what I personally feel would be great first time properties, especially for those looking to own a place of their own. If you are thinking of speculation, I don’t think Kajang as an area provides a huge upside within these short period of time.

If you are thinking about its stock, the target price by Kenanga is also very positive. It gave a target price of RM4.85. This is based on a 30% discount to its RNAV (realised net asset value) of RM6.93  The discount given is because MKH Berhad is considered a mid sized developer. In other words, if MKH is a bigger developer, the discount given may be lesser and the price, higher. At RM4.85, it also implies a FY15 forward price-to-earnings ratio (PER) of 11.7 times. Their price today (30 May 2014) is RM3.90

written on 30 May 2014

Next suggested article:  New property prices up 50%, how much is your profit?

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