Monday, May 12, 2008

Metro Kajang on the move

Today the low profile Metro Kajang (6114, 美景控股) shown its publicity in The Star as well as Sin Chew regarding its recent complete acquisition of a 273-acre prime freehold land (Paradise Estate) in Kajang, which is just 2.5 km from the Kajang town centre and is accessible via the SILK Highway and Jalan Reko. This is in addition to their existing 455 acres of landbank in Selangor and 324 acres in Perak.

Metro Kajang has paid RM80 million for the land, and plans to turn it into a high-end integrated township with 3,500 units of high-end homes with a gross development value (GDV) of RM1.5 billion.

Kajang has an annual population growth rate of 8%, and Metro Kajang is the biggest developer in Kajang and Semenyih area which had built over 1,000 residential and commercial units in the region over the past 20 years.

Last year was not a good year for Metro Kajang, as it recorded lower percentage of profit recognition upon completion of recent projects in Damansara and Petaling Jaya, and its new projects with a combined GDV of RM162 million on 24.4 acres near its head office at Wisma Metro Kajang in Jalan Semenyih were still at the preliminary stage of development. This has brought down its revenue, despite its pre-tax profit being lifted by a RM13.8 million gain due to revaluation of its investment properties. This might explain for its low PE and declining in share price from the peak of RM2.20 since 16 July 2007.

Recent move in Metro Kajang also include the complete acquisition of an Indonesian company which has a 35 years title of 15,942ha (39,395 acres) land in East Kalimantan suitable for palm oil plantation.

Metro Kajang isn't an exciting counter, but it is pretty stable in profitability as stated in their annual report: "The Group posted an uninterrupted profit track record since commencing business twenty years ago".

The price hike in steel, cement, brick and other building materials is no doubt bringing negative impact to its property development and construction division, which is their major contributor of operating revenue and profit. The board of directors only foresee a satisfactory result for year 2008. As at 31 December 2007, they have lock-in unbilled sales value of 167.9 million, and they've targetted to launch new property of over RM200 million this year.

Disclaimer: This article is intended for sharing of point of view only. It is not an advice or recommendation to buy or sell any of the mentioned stock counters. You should do your own homework before trading in Bursa Malaysia.


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