E&O - RM1b property portfolio

According to The Edge, E&O plans to assemble an array of properties worth RM1bil that it hopes will give it a steady recurring income.
Executive Director, Eric Chan says that this move will reduce the dependence of income generated by E&O Prop. The creation of a property investment portfolio would add more depth and generate returns at E&O level.
E&O remains undervalued due to its status as a holding company. E&O's market value is RM1.11bil while its 64% stake in E&O Prop alone is worth RM1.5bil.
For your information, E&O has proposed to dispose of up to 90mil shares, represents 13.8% stake in E&O Prop and its entire 50.8% stake in Putrajaya Perdana Bhd. The proceed may be used to fund the property investment portfolio.
E&O itself is developing an office tower project on the 1.15-acre site, in downtown KL. The development cost is about RM150mil and the project is not for sales will go into the property investment portfolio.
Adding to this will be a retail component at the marina of STP which will eventually be sold by E&O Prop to E&O. There will be another shopping mall for lease to Tesco near STP project as well. It will be sold to E&O as well.
Eric Chan also says that E&O is expecting a return of RM80mil or more a year and this should be good enough by considering E&O's net profit was RM60.9mil last year.


Meanwhile, E&O closed at RM3.02 with high volume today. E&O Prop hit it historic high at RM4.06 but failed to sustain and closed at RM3.86 today. E&O looks interesting at this point of time. However, there is another factor to consider where Goldman Sachs has disposed some E&O's shares last few days.

In short term, E&O will continue to depend on the income generated from E&O Prop ...