L&G (Debt Free) Vs. MK Land (Debt Reduction)

L&G - Dated 2011 …

When Hong Kong-based property tycoon Tan Sri David Chiu emerged as a substantial shareholder in Land & General Bhd (L&G) in August 2007,there was speculation of a possible asset injection or takeover exercise. Itpushed the stock from 20 sen to over 80 sen in six months, but there was noasset injection.

Instead, the new management spent the last few years quietly cleaning house andstrengthening the foundations of the company.

Now, things are lookingup for the company with projects worth RM2.41 billion in gross developmentvalue (GDV) in its pipeline.

What is going to be themajor, lucrative development for L&G going forward — its remaining 43acres (17.2ha) of freehold development land in Sri Damansara, the jewel in thecrown.

L&G’s net bookvalue (NBV) for the land is carried at less than RM20 per sq ft.  comparison,freehold commercial land in Mutiara Damansara is now valued at more than RM400psf.

The low land cost could translate into fat margins for L&G, much higherthan the standard “20-over percent” margin for an ongoing project. ompletedservice apartments or condominiums in Mutiara Damansara are now being sold formore than RM600 to RM700 psf, while in Sri Damansara developers such as TAGlobal Bhd are now trying to price their new units at more than RM400 psf oreven RM600 psf.

L&G had noborrowings and had cash of RM141.4 million as at Dec 31, 2010, withshareholders’ funds of RM248.2 million.

L&G’s unbilled sales are currently about RM45 million, arising fromthe 8trium@Sri Damansara project which only has 10% of construction works to becompleted but exclude its 50% share of the RM200 million GDV sold in the phase1 of The Elements@Ampang.

Meanwhile, L&G, witha cash position of RM141.1 million, is scouting for more landbank.

Bandar Sri Damansara developerLand & General Bhd(L&G) plans to step up the development of its remaining 67 acres (26.8ha)of land in the prime township. The first of these projects will be a RM1.5billion high-rise residential development on a 42-acre site to be launched bythe end of 2011.

To be built over four phases, the project, code-named as “Meranti”as it was located along Persiaran Meranti in the township, will consist of2,800 units of three-bedroom condominium, within the size range of 1,300 sq ftto 1,600 sq ft. According to Low, the product is mainly targeted at homebuyers, as its design and features will incorporate practicality andfunctionality which serve better for family’s use.

After Meranti, L&G will have 25 acres left in the township, which thecompany plans to develop into a mixed integrated commercial development.

The company is currently developing another high-rise development inthe vicinity of Ampang, Kuala Lumpur,called the Elements@Ampang. The development, which comprises two blocks ofhigh-end serviced apartments, has received encouraging sales as 70% of thefirst phase has been sold.

L&G also has other businesses such as plantations and education. Goingforward, contributions from the plantation and education business will shrinkfrom over 30% now to only 10% as the group seeks to focus on its core businessof property development.



MK Land - Dated July 2012 …

 The group's degearing exercise and businessstreamlining (liquidated ascertained damages issues and disposal of non-coreassets) are within expectations.

The group is toyingwith the idea of paying dividends again in line with the group's improvedprofitability and strengthened balance sheet.

There are RM400mil of unbilled sales. MK Land willcontinue to focus on pushing the remaining units in Rafflesia (semi-Ds) andMetropolitan Sq (condominiums) with a combined RM760mil in gross developmentvalue (GDV).

The group is exploring more new products such asbungalows and condominiums, possibly in the next one to two years.

Separately, MK Land reassured that the liquidatedascertained damages issues are now behind them, and the priority now is tocomplete the delayed project.

Estimate MK Landstill has about RM90mil outstanding from the previous land sale, which willdefinitely help the group to reorganise its debt structure to be moreefficient.

MK Land's totaldebt has improved by 10.6% sequentially from RM220.2mil to RM197mil, which isin line with the group's plan to reduce debt. Net gearing is 0.11 times now,and do not discount the possibility of further land sale which will put thegroup comfortably in net cash position.

A 25-acre Daman-sara Perdana and the 55-acreSetiawangsa land sale could add about RM320mil to the war chest, or equivalentto the group's market capitalisation now.

MK Land is thelargest landowner (about 170 acres net land) near the Taman Tun Dr Ismail-Damansara-Puchong Highway interchangeshould benefit from rising land prices and positive catalysts such as potentialdividend or land sale could give the much needed sparks to the stock.

Source: Kenanga