We have often heard of gross development value (GDV) of over a billion ringgit or even a few billions these days. Getting bigger year after year even with a small piece of land, aslong as it’s strategic. However, do you know of any public listed developers having up RM30 Billion worth of land? Assuming land cost is 10 percent, the potential GDV for this RM30 billion land would be RM300 billion! Note that this is mere assumption. Perhaps the land cost can be even higher. This company will become reality when Iskandar Waterfront Holdings Sdn Bhd (IWH)’s proposal to buy the remaining 61.7 per cent stake in IWC it does not already own. It will then assume IWC’s listing status on Bursa Malaysia’s main board. Full report in NST here.
What’s the price like currently? Well, we can refer to klse.i3investor.com Image beside. This proposed merger will create one of Bursa Malaysia’s largest property developers with RM30 billion worth of land according to IWH. Whether it happens or not would be decided by April 19. The RM1.50 offer price represents a 14 per cent premium over IWC’s 30-day volume weighted average price up to March 3. (Yes, if you think this deal is awesome for the future of IWH, you can also buy the share and hold) By the way, this is also called ‘backdoor’ listing. Sometimes, when a company is in trouble, a white knight will come to its rescue and assume its listing status. That’s also called backdoor listing. Quite a normal situation in many bourses in the world today. Here’s another report in dailymail.co.uk Four banks were appointed joint principal advisors for IWC. They are AmInvestment Bank Bhd, CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd (Usually, more than 1 bank is appointed when the deal is a mega one. Besides that, every bank would have their own network of investors which is better too. The wider the network, the more potential property buyers? Haha. That’s one minor reason lah.)
Iskandar Waterfront Holdings which is also partly owned by the Johor state government will also be embarking on a proposed restructuring exercise via internal rationalisation of minority stakes within the group and various Johor state entities. By the end of this rationalisation program, IWH will have a total land bank of more than 7,400 acres in Kuala Lumpur and Johor Bahru, making it one of the largest property companies in Malaysia. Remember, largest or smallest should NOT be the major reason we buy. Only buy the share if we know the business that the company is in is profitable and sustainable over the long run. So, the question would be how much do you believe in Iskandar Malaysia. As usual, the alternative to buying the stock is to buy the actual property being developed. 🙂 Happy buying.
written on 7 Mar 2017
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