Goldman Sachs is in action again :
The Goldman Sachs Group, Inc has emerged as a substantial shareholder in property developer EUPE Corporation Bhd with a 5.72% stake.
A filing with Bursa Malaysia showed that Goldman Sachs acquired 2.2 million EUPE shares on July 11.
The acquisition raised its shareholding to 7.32 million shares.
The Kedah-based company's share price surged to RM1.34 on July 11, riding on the positive outlook for property companies.
Below is the research report from HDBS:
Demand to pick up. We notice the recent trend and incentives by the government is changing the property industry structurally and expect long-term positives occurring in the sector, especially the high-end segment.
Untapped foreign market. The lifting of RPGT, easing of foreign ownership and speedy delivery systems are in our view, important and liberal measures taken by the government to improve the attractiveness to the largely untapped foreign demand. The government has a target of at least RM20b foreign ownership by 2010. Early signals such as appreciation in prime land prices, increase in selling prices of high-end properties and high pre-sold sales indicate that our properties, especially the
luxury segment, are due for re-rating.
Maintain Overweight. Financially strong developers with strong branding and properties skewed to mid-high end are set to benefit. YTL Land (YTLL MK, PT RM3.30) and Sunrise (Sun MK,PT RM4.90) are our picks for the sector to ride on the property
upcycle.
Research houses Macquarie and KAF Seagroatt & Campbell Securities set their target prices of RM2.60 and RM2.75 respectively on Mah Sing. These target prices are adjusted after the bonus issue and stock split undertaken by Mah Sing.
Mah Sing closed at RM2.30 last Friday. Thus, the target prices imply a potential 13% to 19%.
The ex-dividend date of this stock is on 1 Aug 2007.
The below property companies have been picked by The Edge, to watch in Penang property play:
1. Sime Darby Bhd - front runner for the job to upgrade Penang International Airport;
2. Equine Bhd - holds a 25% stake in a projects to redevelop 249 acres of prime land currently occupied by the Penang Turf Club (named Penang City Park with an estimated of RM25bil GDV);
3. Oriental Holdings Bhd - owns 118 acres of vacant freehold land on Penang Island, which were acquired many years ago at a low cost of RM10.56 psf;
4. E&O Property Development Bhd - developing Sri Tanjung Pinang and owns 355.58 acres of vacant freehold land in the South West district at a cost of RM120.5mil, or RM7.78 psf;
5. Mah Sing Group Bhd - will develop Southbay Penang which is expected to generate a total of RM1.28mil;
6. Hunza Properties Bhd - a local Penang-based developer; and
7. Sunway City Bhd - owns a 38.61 acres of vacant freehold land in Penang Island and has completed several projects as well successfully.
There was a negetive article about Glomac, back in May 2007. Some analysts raised their concerns as the group's flagship project - Aman Suria Damansara is nearing completion, no clear project substantial enough to fill the earnings of Aman Suria Damansara for FY2007 to FY2008. It is further reported that newer commercial projects, when completed, may be caught at the wrong end of the office property cycle. An analyst adds: "With the property sector boom in the early cycle and the government launching more incentives to boost the sector, it may be too early to call a 'sell' on Glomac.
For the Financial Year Ended 2007, Glomac recorded a total of RM293mil revenue, with net profit of RM32mil. The revenue is slightly higher as compared to preceding year [RM285mil]. However, net profit is slight lower [RM32mil vs RM37mil]. Glomac has declared a total of 9 sen dividend for both financial years. Net assets per share has increased moderately from RM1.81 to RM1.90.
Meanwhile, Glomac has moved beyond Malaysia. The group has identified some 30 acres in Pune (India), a second-tier city with a population of about six million, to build its first residential projects overseas. This planned project will concentrate on high-end residential homes targeted at the locals.
To recap, Glomac already has investments in Australia and Thailand. Last year, it purchased an office building for A$30.5mil in Melbourne and bought into a Thai company specialising in constructing warehouses. Glomac inked the partnership earlier this year and WHA Glomac Aliance Co Ltd was formed.
WHA Glomac Alliance officially handed a purpose-built pharmaceutical warehouse for Dielthlem Ltd on July 9. It is located on 76,000 sq m of freehold land in Bangkok's Samutprakam province. Two warehouses haven been buily offering some 550,00 sq ft of space. It will be leased to Dielthlam for 15 years with rental to increase by 10% every three years. This has created a good recurring income for the group
At home, Glomac is being kept busy with several commercial projects that are expected to take of next year. Plans have been submitted [Glomac Tower] and the group is confident that it will be start working early next year even with the official freeze on construction of office building in the city. Any developer who wants to put up an office building in the city has to ensure its secures a substantial percentage of tenants who require the space. Glomac's executive vice-chairman, Datuk Richard Fong confirms that Glomac has secured some 'big tenants'. Glomac is looking at some banks from Middle East taking up the space. This is by virtue of its partnership with Al Batha.
Lastly, Glomac would prefer to look at India for the time being, rather than IDR or Penang.
Closed at RM1.69 last Friday, should it be a cheap entry for a small property company which has exposure/venture into overseas - Thailand, Australia and India?
Glomac looks interesting to me after this week correction. It closed at RM1.69 this week, a pull back after it hit the highest price at RM1.81 on Tuesday.
2 major projects from Glomac - Suria Stonor and Glomac Tower set to be another milestone from the developer. Both projects will be the additional landmarks in KLCC area.
Glomac Tower
Glomac and Al Batha Real Estate Co have established Glomac Al Batha Sdn Bhd to spearhead the development of the Grade A office tower which will be located at the corner of Jalan Pinang and Jalan P.Ramlee. The 40-storey tower which includes two levels of food and beverage facilities and four basement car park levels is scheduled for construction in the first quarter of 2008.
The construction of the tower, which has an estimated gross development value of RM 450 million, will take approximately 30 months to complete and will be boost in confidence for investors from the Gulf region.
Al Batha Real Estate vice-chairman Sheikh Salem Mohammad Sultan Al-Qasimi said, he hoped the relationship with Glomac would lead to more property developments here. Glomac has a 51% stake in the joint venture.
Surio Stonor
Suria Stonor is an exclusive condominium development that combines the space and ambience of a bungalow with all the conveniences of modern living.
Located in an oasis of serenity in the heart of the city within the Stonor Enclave, Suria Stonor offers some of the most generous living spaces within the vicinity of the Kuala Lumpur City Centre. Each of its 138 freehold residences, comprising triplex penthouses, duplexes and condominiums, offers a built-up that ranges from 3,000 sq. ft to over 8,000 sq. ft.
Sales in Suria Stonor have continued to climb higher. The project is now almost 80% sold, and it is on schedule for completion in April 2008. The pricing is now about RM1,000 per square foot, which is reflective of the current pricing for high end condominiums in the vicinity of the city centre
Filing to Bursa Malaysia shows that Capital Group has acquired Mah Sing aggressively from 5 July to 9 July. They have acquired a total of ~11mil shares during these trading days.
After the acquisition and bonus issue (1 for 5), Capital Group holds ~59mil shares of Mah Sing. The recent acquisition by Capital Group shows their confidence in Mah Sing Group?
Finally, nX CEO PY Tey came out and explain the high receiables of the company. It was reported in The Star.
I have two questions:
1. If the cash flow is strong, why do they need to accept the credit facility?
2. If the likelihood of default payment was not strong, why they made provision of doubtful debts in last quarter result?
Announcement to Bursa Malaysia, from Nextnation shows that Nextnation has accepted a Credit Facility:
The Board of Directors of Nextnation Communication Berhad ("Nextnation" or "the Company") is pleased to announce that its wholly-owned subsidiary company, namely Nextnation Network Sdn. Bhd. ("Nextnation Network" or "the Borrower") had on 9 July 2007 accepted a Credit Facility i.e. a Revolving Project Loan of the principal amount of up to RM10.0 million only ("the Credit Facility") granted by Malaysia Debt Ventures Berhad for the Group's overseas expansion.
The Credit Facility is secured by corporate guarantee from Nextnation and the Borrower's certain assets.
Is this an indication that nX is running out of cash? Or they will be awarded a major project from overseas?
Looking at the current cash balance of the company, it is really worrying ....
YTL Land has continued to surge higher in last week. It was opened at RM1.80 on Monday and closed at RM2.38 on Friday, the stock's 52-week high. As a reminder, HDBS has pegged YTL Land's target price at RM3.30, substantially above last Friday's closing price.
YTL Land's key landbanks include Lake Edge in Puchong, with about RM100mil GDV left; Pantai Hillpark (RM800mil GDV left and a 294-acre area in Sentul with a GDV of about RM17bil remaining.
Meanwhile, YTL Land has released the advertising 'teasers' for its d7 project, its first commercial development in Sentul East, with a GDV of about RM80mil.
HDBS forecasts YTL Land's net profit for FY2007 to be RM16.1mil, which is more than 50% lower than FY2006's net profit of RM45.9mil. However, forecasts for the company's net profit in FY2008 and FY2009 to pick up to RM55mil and RM148.3mil respectively.
Adventa Bhd has been picked as one of the hot stocks in this The Edge.
Below are the information from The Edge:
Technical support : Long term - RM1.20; Short term - RM1.50
Technical resistance: Long term - RM3.20; Short term - RM2.10
Dealers say CEO Low Chin Guan's recent statement that the company's output of surgical gloves from several new production lines were sould out caused the counter to spike. A dealer says latecomers should take the oppurtunity to move in when the counter sees a correction.
Adventa Bhd involves in manufacturing and distributing of healthcare products. It looks interesting according to Kenanga Research, with a target price of RM2.48 Adventa closed at RM1.70 today, add on another 7 sen.
Below are the major points from the research report:
Glove manufacturer with a difference, being only a handful of manufacturers capable of making a meaningful entry into the high end surgical glove market. First Malaysian company to be TUV certified since 1997 which can count upon reputable clients including John Hopkins Hospital of USA and large Group Purchasing Organisations;
Aggressive capacity expansion should see output rising from 2 billion pieces to 3.5 billion by FY09, a 34% CAGR increase;
High barriers to entry for the surgical glove segment, unlike the normal examination glove where requirements are demanding and qualification time consuming. Surgeons “stickiness” to a particular brand can pose a huge barrier for new aspirants. With quality and competitive pricing, the Group has been able to make successful inroad into this segment under OEM and their own brand basis;
Foray into Uruguay should bear fruits in the medium term. Cost advantages couple with the ability to provide a higher level of service to a market size of 500m in terms of population is an opportunity not to be missed. The South American production facility allows for the scaling of the tariff wall and cut short the lead time for customer order to eventual receipt of the goods; and
Compelling valuation at 6.3x FY09. Fair value of RM2.48 based on 6.5x FY09F (January year end) represent a 25% discount to the market average of 12.8x. The discount is mainly to account for its smallish size and the execution risk with its overseas forays. With increase investor familiarity and proven execution, the discount factor can and will be narrowed. Buy with an upside of 52% from the current RM1.63 level.
Lastly, Adventa has been delivering consistent quarterly financial performances as well: 
Finally, Mah Sing has upgraded their website. Frankly speaking, the website prior to this upgrade was a bit lousy and did not match with the image of the company - Premier Lifestyle Developer.
Now, we can check the series of property development from Mah Sing easily in the website - Perdana, Residence, Legenda and Commercial.
Perdana
It is synonympus with well-planned lifestyle townships. The townships would be self contained yet easily accessible. Generous, well maintained central parks will become community focal points. It is priced between RM200k to RM700k.
Residence
The trend-setting Residence series will appeal to those who aspire to better living. Thoughful details in both the interiors and exteriors of the homes will be characteristics of these boutique developments. Extensive landscaping including green perimeter buffers, manicured and courtyards will add to the spacious airiness, allowing the project to blend seamlessly with nature. It is tagged between RM700k to RM1.3mil.
Legenda
The luxurious Legenda series is the elites, the creme de la creme who reward themselves with a home in a prestigious, prime location. Manicured landscaping and lush geenery creates a revitalizing ambience for wholesome living. Smart home features enhance comfort and convenience, while state of the art security features ensure tranquility unperturbed by the outside world. It starts at RM1.3mil.
Commercial
It is in prime locations in the economic hotspots of Malaysia. Grade A office building, resort offices with innovative themes to enhance new business lifestyles. Live, work and play. An irresistible investment opportunity for discerning investors.
I saw YTL Land d7 Sentul East advertisement in this week The Edge. I went to the website and found that it is quite unique. d7 Sentul East contains duplex office, retail and F&B.
Some of the features of d7:
- cutting-edge duplex offices with exclusive bridge unites
- half sculpture, half workspace
- 10 mins to KLCC and Mont' Kiara
- 45 mins to KLIA
- next to Sentul KTM Komuter & LRT stations
- wireless broadband
- freehold
This should be the starting point of the entire development in Sentul area. YTL Land has a big plan for this area according to the research report from HDBS. YTL Land closed at RM1.80 last Friday. This represents a potential upside of 83% according to the target price set by HDBS, RM3.30.
Below are the top picks from CIMB:
Target Price (RM)
Air Asia 2.45
AMMB 5.35
Gamuda 8.75
Hunza Prop 4.50
Kencana 2.20
KL Kepong 14.50
Maybank 15.30
MRCB 3.15
SP Setia 10.00
Tenaga 15.00
Meanwhile, CIMB also set KLCI target at 1,7000 points in the next 12 months. I notice that the target prices are not attractive by looking at their current prices. Is this an indication the uptrend is limited now?
Below is the article in The Star:
Mah Sing Group Bhd has proposed to build sea villas as an added attraction in its Southbay Penang project.
Managing director Datuk Leong Hoy Kum said Mah Sing was in the process of submitting its application to develop these villas.
Speaking after the company AGM yesterday, he said should it be given approval, it would be a first in Penang.
He also said Southbay’s current gross development value (GDV) of RM1.28bil did not include the proposed sea villas, which would be built on the seabed.
“Southbay’s target market includes local and foreign investors who are keen to invest in high-value commercial properties,” he said.
Southbay’s residential developments, Legenda@Southbay Penang and Residence@Southbay Penang, are set to be launched in the first half of 2008, to be followed by commercial properties.
Also included in its target market for Southbay were participants in the Malaysia My Second Home programme, Leong said.
The foreign investors interested in Mah Sing’s properties were from South Korea, Japan, the Middle East, Hong Kong, the US, Singapore and Europe, he said.
Leong also said the group was keen to lure institutional investors, as Malaysia’s property sector was attractive due to its prices being among the lowest in the region.
On overseas markets, Leong said Mah Sing was discussing with some parties in Vietnam to venture into residential and condominium development within Ho Chi Minh City, and also exploring opportunities in Doha.
“But, we are in no hurry to venture overseas. We are evaluating opportunities and, if we do go abroad, we want to ensure minimal capital outlay,” he added.
On the Icon development in Jalan Tun Razak, Kuala Lumpur, Leong said Mah Sing was keen to retain one of its blocks to ensure recurring income.
Mah Sing would capitalise on the low supply of semi-detached houses and bungalows in the Klang Valley, he said.
He added that of the total residential supply (in the Klang Valley), only 5% consisted of these types of residences.
Also, Leong said, Mah Sing was keen to further boost its commercial and office property sector due to its high growth potential.
Based on studies from Regroup Associates, it is estimated that buyers outnumber sellers by as much 15:1 in certain (commercial) developments.
With this high demand, it had set a target price of about RM900 per sq ft for Grade A offices in Kuala Lumpur within two years.
To date, Mah Sing has 13 developments and, with unbilled sales of RM430mil as at March 31, bringing its total GDV to RM3.9bil.
nX posted a net loss of RM251k in Q4. It is very bad as I do not expect a growing company like nX will register a quarterly net loss.
It is worrying as they do not disclose how much they spent for upgrading the systems and the most important point is they provided doubtful debts. In other words, the trade receivables will not be all collected eventually.
By comparing this quarter (Q4) against last quarter (Q3), revenue recorded has decreased from RM28mil to RM21mil while operating expenses remain almost the same RM22mil vs RM21mil. Another disappointed point is the loss before tax incurred in other countries, which is amounted to RM7.7mil. This is arrived even though nX recorded a total of RM44mil from the operations in other countries.
The qtrly result is badly impacted when the management provided doubtful debts expenses. It is to first time they done it and we do not know will they provide this again in the future. We also do not know when the upgrade of systems will be completed as well. No dividend is proposed since the cashflow is weak and disappointing as well.
In the mean time, I am wondering how much the share price will drop on Monday. Hopefully the current low price has reflected the bad current quarter result. This is the worst investment I ever made. Are you going to hold on? I am calculating how much I can get back by disposing it for future investment.
nX, good bye and I wish you all the best in the future.
Below is the article about YNH Property in The Star:
YNH Property Bhd's share price has fallen 50 sen over the past three days on reports that a proposed joint-venture agreement with Singapore's CapitaLand Ltd has lapsed, which was confirmed by the latter yesterday.
However, YNH is confident the development of Menara YNH in Jalan Sultan Ismail, Kuala Lumpur, will proceed as scheduled despite the exit of CapitaLand.
According to YNH chief financial officer Y.M. Chan, the company will launch the project this year and expects it to be completed in 2011.
The approvals from the authorities are expected in the next two to three months.
Last December, YNH's wholly-owned unit Kar Sin Bhd entered into a memorandum of understanding (MoU) with CapitaLand Commercial and Integrated Development Ltd to jointly develop the commercial project beside the Shangri-La Hotel.
YNH was to have a 60% stake in the joint venture.
In a joint statement on the deal, the two companies had said further details would follow approval from the authorities.
But, in a statement yesterday, CapitaLand said the joint development with YNH had been called off. It said the MoU to build an office tower in the Golden Triangle of Kuala Lumpur “has lapsed due to non-fulfilment of the conditions precedent”.
In an announcement to Bursa Malaysia, YNH said the deal was off and it would develop the project on its own.
It is understood the dispute was over the value of the 133,000-sq-ft land of the project.
According to Chan, a few other potential partners had shown interest in the project and that the company would consider their proposals.
“Based on our strong cash position, and with the support of financial institutions, we may decide to undertake the project on our own,” he said.
He said a number of global real estate and private equity funds had shown interest in buying the building en bloc.
“Going by the strong interest and the high expected yield of 7% per annum, we have raised the price of the building to RM1.5bil from RM1bil,” Chan said.
The office tower with a net lettable space of 1.1 million sq ft – of which 10% is retail space – will cost RM500mil and provide an expected gross margin of 38% to YNH.
To ensure top quality and premium value, Chan said a reputable contractor, preferably from Japan, would be engaged to work alongside YNH's in-house construction arm to undertake the project.
YNH shares ended yesterday 15 sen lower at RM2.80. 
YNH continued its downtrend today as it gave up another 10 cents. I believe recent drop of share price is due to over reaction by the investors. Although the JV agreement has been called-off, there is no major impact to the company at the moment. Furthermore, YNH has explained that they will be able to develop the office tower themselves or with the other partners. As a result, I believe it is a good chance to buy into YNH at the current price.
While Goldman has been disposing E&O recently, it appears that G.K. Goh Holdings Limited from Singapore has purchased E&O shares from 18 June to 20 June. Filing to Bursa Malaysia shows that G.K. Goh Holdings Limited has purchased a total of 1.5mil shares during the period. After the acquisitions, G.K. Goh Holdings Limited has accumulated a total of 73,049,699 shares of E&O, which represets 19.14% of E&O.
By checking the historical prices of E&O, it was traded between RM3.00 to RM3.12 during the period. I was wondering what has triggered G.K. Goh Holdings Limited to make the purchase. Thus, I have checked the share price of E&O Prop. During these 3 days, E&O Prop had a great breakout where it was traded from RM3.80 to RM4.34.
It would be great if G.K. Goh Holdings Limited continues to buy in E&O as it can provide the support to the share price when Goldman continues to dispose their holdings.
Filings to Bursa Malaysia show Goldman Sachs has disposed E&O shares consistently recently. The details of the disposals are as follow:
Date & No of securities
11/06/07 - 100,000
12/06/07 - 100,000
13/06/07 - 60,000
14/06/07 - 31,000
15/06/07 - 5,000
18/06/07 - 300,000
19/06/07 - 300,000
20/06/07 - 500,000
After the disposal, Goldman is still holding 27,369,300 shares (7.17%). As Goldman continues to dispose E&O, I believe it would be difficult for E&O to have any breakout from it's trading range in the near term. E&O has been trading around RM3.00 a few weeks. I would consider E&O is lucky enough if it can hold around RM3.00 while Goldman continues to sell off.
