Icon8888 Gossips About Stocks

(Icon) Symphony Life - An Exciting Life Ahead

Icon8888
Publish date: Sat, 19 Apr 2014, 10:37 AM
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I follow the smell of money.

 

 

Symlife was brought to my attention by an article written few days ago by one of our fellow blogger.

 

 

I have done a study and concurred with his view that the stock does look interesting and worth paying attention.

 

 

1. Background Info on Symlife

 

Symlife is a property development company listed on Bursa and was previously known as Bolton Berhad.

Based on 310 mil shares outstanding and latest closing price of RM1.16, it has market cap of RM360 mil.

The group reported aggregate net profit of RM50.3 mil over the past four quarters, this translates into historical PER of 7.1 times.

 

Calender year Q1 Q2 Q3 Q4 TOTAL
2013 (RM mil) (RM mil) (RM mil) (RM mil) (RM mil)
           
Revenue 140.5 98.4 99.6 98.6 437.1
           
Net profit 15.7 11.4 12.7 10.5 50.3
           
EPS (Sen) 5.1 3.7 4.1 3.4 16.3

 

 

As at 31 December 2013, the group has net assets of RM544 mil, interest bearing debts of RM295 mil and cash of RM132 mil.

To be conservative, let's assume that all the cash will be used to fund the group's future landbanking and / or property development activitues. As such, the gearing is 0.54 times.

However, out of the RM295 mil debts, RM130 mil is due in 5 years time (Islamic Medium Term Notes). As such, over the next few years, the group only needs to service principal repayment of RM165 mil, or average of RM33 mil per annum. 

This amount is relatively small if compared to the group's net assets of RM544 mil and revenue of more than RM400 mil in the latest financial period.

In other words, the group has a relatively healthy balance sheet and shouldn't have problems servicing its financial obligations.

 

 

2. Landbanks

 

According to the company's annual report for the financial year ended 31 March 2013, the group's land bank are as set out below :-

 

      Year  
  Area Description Acquired / NBV
Location (acres)   Revalued (RM mil)
         
Jalan Ceylon, KL 0.9 development land 1983 2.6
         
Puchong, Selangor 29.2 mixed development land 2001 33.9
         
Senawang, N Sembilan 3.2 mixed development land 1996 17.5
         
Cheras, KL 10.6 commercial land 1991 9.0
         
Bukit Tunku, KL 1.3 development land 2004 17.6
         
Daerah Gombak, Selangor 13.7 agriculture land 2000 0.1
         
Sungai Long, Selangor 419.0 mixed development land 2012 137.4
    (with part quarry)    
         
Sungai Petani, Kedah 259.2 mixed development land 1995 56.0
         
Sungai Petani, Kedah 162.0 mixed development land 2006 13.5
         
Tanjung Bungah, Penang 3.4 development land 2007 2.8
         
Section 87A, KL 1.0 development land 2008 27.7
         
Daerah Gombak, Selangor 23.0 development land 2010 99.0
         
Mont Kiara, KL 4.5 development land 2013 40.6
         
TOTAL 931.0     457.7

 

 

As shown in the table above, the group has more than 900 acres of land bank at strategic locations (mostly Klang Valley and Penang) with net book value of RM458 mil.

One of the most interesting piece is the 419 acres located at Sungai Long near Kajang, which has GDV of RM6 billion and could last the group for 10 years. 

Many of these land bank were acquired / revalued many years ago. As such, the actual valuation should be substantially higher.

 

 

3. Development Projects

 

The group launched RM688 mil properties in FYE 31 March 2013 :

 

Properties launched in FYE 31 March 2013. Take up rate as at June 2013  
Project   Location Type GDV (RM mil) Take Up Rate (%)
Wharf Residence (Tower 18) Puchong Service apartment 128 100
Tijani Ukay   Ulu Klang Bungalow units 320 27.1
Sri Rampai   Wangsa Maju 3 storey superlink 100 Build and sell
Wharf Residence (Tower 28) Puchong Service apartment 140 84.1
TOTAL       688  

 

For the FYE 31 March 2014, the group targets to launch the following development projects :-

 

Properties to be launched in FY2014    
Project   Location Type GDV (RM mil)
Mont Kiara (Phase 1) KL Service apartment 268
51G, Persiaran Gurney KL Condominiums 210
Lot 162, Taman Tasik Prima Puchong Condominiums  / Villa 90
U10   Shah Alam Landed residential 200
Sg Long   Cheras Mixed development 822
TOTAL       1,590

 

(The Wharf Residence, Taman Tasik Prima, Puchong)

 

 

(Summerhomes, Taman Tasik Prima, Puchong)

 

(Flexisuites, Taman Tasik Prima, Puchong)

 

(Tijani Ukay, Ulu Klang)

 

 

The group is also in joint ventures with various parties to undertake development projects in KL, Kelantan and Sabah.

Altogether, future GDV is approximately RM3 billion, approximately 7 times 2013's revenue of more than RM400 mil.

It is estimated that unbilled sale as at December 2013 is apprxoimately RM600 mil.

 

 

4. Share Price Has Yet to Reflect Improvement in Fundamentals

 

Due to its low profile and lack of coverage by analysts, despite reporting consistent net profit of more than RM10 mil per quarter over the past twelve months, the company's share price traded within a tight band of RM1.00 and RM1.20.

 

 

5. Warrants

 

The company has 107 mil of 7-years Warrants outstanding (Symlife-WB).

Exercise price of RM1.10, expiring in November 2020.

Based on latest closing price of 44 sen and mother share price of RM1.16, conversion premium is approximately 33%. 

 

 

6. Concluding Remarks

 

(a) Symlife is trading at substantial discount to net assets. Based on its net assets per share of RM1.93, PBR is 0.60 times only.

The net assets per share of RM1.93 has not factored in hundreds of million Ringgit of potential revaluation surplus.

In my opinion, revaluation surplus is more than just paper gain. Landbank that has not been revalued would automatically lead to fat profit margin when the properties are launched and developed. 

This augurs well for the group's profitability going forward.

 

(b) The group has healthy balance sheet. The bulk of its debts are due in five years time. The group would have ample financial flexibility for expansion and to cope with any contingencies.

 

(c) The group's huge 419 acres of development land at Sungai Long is one of its key attraction. Bandar Sungai Long, located in Kajang, used to be considered a remote area. But with the completion of various highways, it is now only approximately 40 minutes travelling distance from KL.  As such, in recent years, the area has attracted attention from housebuyers and property investors.

The group has settled the conversion premium and extension of lease for the land. It is estimated that the Sungai Long project will have GDV of RM6 billion and will take easily 10 years to complete.

 

(d) The stock is now trading at undemanding historical PE multiples of 7 times. This is expected to drop further as future development profit are gradually booked in.

Due to its low profile, the stock is relatively unknown to investors. However, it would be a matter of time before it starts gaining recognition, just like Gadang and GOB.

 

Symlife is interesting because it has small market cap and yet sits on huge tracts of land bank. Most of which are not revalued and reflecting market pricing at 1990s and early 2000s. The group used to be mired in debts. But with new owner and management, the group is finally turning around and heading towards the right direction. 

 

An interesting small cap stock packed with potentials.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Discussions
2 people like this. Showing 12 of 12 comments

SpeedyBoy

Like !

2014-04-19 11:57

fortunebullz

Icon8888! I think you hit another jackpot after Gadang! I know the other blogger, don't trust him! You side of the story is much better at presenting 'gems'! I think Symlife will be another run away like Gadang! Good job as always!

2014-04-19 15:49

ctbiau

hope to pick up soon

2014-04-19 15:56

gunners

Hi icon8888..im very interesting read ur blog..if u can share with me what is ur target price base on ur analysis about this stock..im still in learning process how to pick stock

2014-04-19 17:12

Icon8888

Gunners I always target 100% return over three years

No matter who ask me, I will say the same thing for every stock that I pick

That is my criteria for selecting a stock

2014-04-19 17:22

tonylim

If I assume you take position for every stock you blog that must be a Hugh portfolio

2014-04-19 18:00

Icon8888

Tony I don't take position in every stock

2014-04-19 18:10

Up_down

Icon8888. Your target to generate 100% returns in 3 year time is too slow. Based on your blogging on the past few property companies price performance, 100% returns should be able to achieve in less than 6 months.

2014-04-19 18:33

Up_down

Your blogging on the past few property companies is very informative. I will keep it for my future reference. I don't have to do work so hard to compile the data. Thanks.

2014-04-19 18:44

Icon8888

Happy to hear that you find the articles helpful

2014-04-19 19:03

Bill71

Thanks Icon for another good recommendation, good job !!

2014-04-20 15:42

lthma

I accumulate wa over last few months when it is down trend .Thanks Bones an Icon8888 blog articles this week and fire the price and let more potential investors aware of this undervalue counter.Hopethis share is one of black horse in 2014.

2014-04-20 16:15

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