KUCHING: Property developer Metro Kajang Holdings Bhd (MKH) is believed to have plenty of upsides in its future outlook as it continues to build its growth story in the foreseeable future.
In an initiating coverage report by AmInvestment Bank Bhd (AmInvestment Bank), the research firm said MKH’s focus on its main division – property development – is especially commendable as they have managed to transform Kajang into one of the fastest growing townships in Malaysia.
Presently, the group is involved in more than 30,000 units of mixed development project with a value exceeding RM12.0 billion and to sustain that figure, the group is planning a total of RM984 million worth of new launches in FY17 with a focus on affordable residential projects.
Beyond FY17, the group is anticipates sustaining the figure with its sizeable landbank of 1,350 acres across Kajang-Semenyih and the Greater KL that has a total estimated GDV of RM9 billion.
This left AmInvestment Bank to initiate coverage on MKH with a ‘buy’ recommendation and a fair value of RM3 per share based on a sum-of-parts valuation of its property and plantation divisions.
Looking towards the group’s second largest division, plantation, the group’s foray into the segment in 2008 was been a fruitful endeavour as it has managed to grow its fresh fruit bunch production by 242 per cent to 369,000 metric tonnes (MT) within the four year period between FY12 and FY16.
Likewise, its crude palm oil (CPO) production has grown by 325 per cent to 85,000 MT between FY12 and FY16 which translated to a 116 per cent improvement in FFB yield per hectare within the same period to 25MT in FY16.
Today, the group owns 18,388 hectares of land with cultivation rights in East Kalimantan for its oil palm plantation.
Due to the group’s success in these two main divisions, AmInvestment Bank notes that the group proven to be on an outstanding growth story as its revenue has been observed to be soaring as its FY11 to FY16’s 5-year revenue compounded annual growth rate (CAGR) stood at 32.8 per cent.
On the flip side, the group’s earnings growth has been even more impressive than its revenue growth as it registered a FY11-16 five year operating profit CAGR of 52.3 per cent, while its CAGR for net profit in the same period stood at 40.1 per cent.
And despite the rapid growth over the past few years, MKH’s management has remained prudent as it has managed to maintain tis gearing level at a manageable level at 0.42 fold.
“With a strong management team in place, we are expecting this strong track record to be sustained moving forward as the group is anchored by both its property development and plantation divisions,” said the bank.