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Stock Review – IGB(1597) - Klse Value
Sunday, 1 November 2015
Key Value Investor Criteria: -
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Description
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Value
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Criteria
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Point
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Price to Tangible Book Ratio
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0.76*
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< 1
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5/5
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Stock Valuation
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CAPM => 2.90%
Return (2008-2014) =>11.63 %
Undervalue by 8.73%
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CAPM < Return
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4/5
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Return on Asset
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4.5*
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> 0
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4/5
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Return on Common Equity
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5.15*
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> 0
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5/5
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Quick Ratio
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0.95*
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>1
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2/5
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Long term Debt / Total Capital
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23.08*
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<50%
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4/5
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Continue Dividend over Past 10 Years / Since Inception
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Yes
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Yes
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2/2
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Cash From Operation
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Positive > 5 years
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Positive
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5/5
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Total Point
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|
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31/37
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Note:
* Data obtain from Bursa Marketplace on 25/10/2015
* To understand more about the financial analysis ratio kindly visit my hubpages.
By scoring 31/37 (83.78%), we will look into the annual report and the latest quarterly report of IGB before making the decision to buy the stock.
Company Profile
IGB had many segment of business which mainly focus on property. The main segment of IGB are as follows:
- Property Investment - retail (63.78% of 2014 profit)
- Property Investment - commercial (17.91% of 2014 profit)
- Hotel (8.58% of 2014 profit)
- Property Development (1.37% of 2014 profit)
1) Property Investment – retail
IGB retail division is represents by IGB REIT. IGB REIT consists of 2 malls, Mid Valley Megamall and The Garden Mall. Both malls located in a strategies location between Kuala Lumpur, Bangsar and Petaling Jaya. Both malls have 100% occupancy rate.
2) Property Investment – commercial
These division owned office towers in Mid Valley City. The office towers are Mid Valley Southkey, The Garden North & South Tower, Center point North and South, Menara IGB, Hampshire Place, Menara Tan & Tan, Plaza Permata, The AmWalk & North Point.
There is another office tower, South Point target completion in 2016. The new office block will start provided revenue to IGB in 2016.
3) Hotel
IGB owned several hotel in Kuala Lumpur, Penang, Ipoh, Sabah and one in Yangon, Myamar. In 2015 there are soft opening of 3 Hotels, St Giles Wembly-Premier Hotel, Cititel Express Penang, and Cititel Express Ipoh. These new hotel will give revenue to IGB in year 2015.
4) Property Development
Most of the property development project done by IGB is in Kuala Lumpur. Kuala Lumpur is the capital of Malaysia and is the prime location for property development.
There are 2 projects which just launch end of 2014, Damai Residential and Park Manor. Besides that, G Tower is completed and handover progress while Three28 Tun Razak is expecting to complete in 2 Quarter 2016. G tower and Three28 Tun Razak may will give in revenue to IGB for the financial year 2015 and 2016.
IGB also had enter a joint venture with Mitsubishi Jisho Residence to develop a land within the vicinity of KLCC.
5) Others
Besides the above four segments, IGB also had enter into education segment (IGB international school) and construction segment. IGB construction team is building a shopping like Mid Valley Megamall in Johor named Southkey Megamall.
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PROS:
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è Owned Midvalley Megamall and The Garden Mall which located in a logistic location between Bangsar, Kuala Lumpur and Petaling Jaya.
è Once the South Point completed there will be increase of revenue for IGB.
è 3 new hotel soft launch in 2015, these will increase the revenue of IGB.
è Most property development projects done by IGB is in Kuala Lumpur.
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|
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Director of the company
IGB is mainly owned by the Tan family through Goldis Berhad which owned 73.32% of IGB (as of 31 March 2015).
The current group managing director, Dato’ Seri Robert Tan is from the second generation of the Tan family. He took over IGB from his father Mr Tan Kim Yeoh the co founder of IGB forerunner Ipoh Garden Berhad which focus property development in Australia.
Since Dato’ Seri Robert Tan took up his new position in IGB in 1995, he had works on the IGB first major project of IGB in Malaysia, Mid Valley City.
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PROS:
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è Dato’ Seri Robert Tan had managed IGB for 20 years and brings IGB to its current status.
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Financial Statement
From the annual report 2014, IGB short term borrowing had increase from RM 163,460,000 to RM 575,288,000 and long term borrowing increase from RM 1,394,909,000 to RM 1,571,267,000. From the recent quarterly report for financial period end 30-6-2105 the short term borrowing further increase to RM 829,517,000.
From the annual report 2014, there is RM 1,592,254,000 had to be paid of in the period of 5 years. While 1,256,267,000 is about to due in 2016 which is 78.9% of the loan. The is worrying me because if IGB is going to take off all the cash reserve to paid the loan of RM 1,256,267,000 next year and there still lack RM 175,384,000 (base on the cash reserve in 30-6-2015). However they can have another loan or issue share place which will dilute the IGB shares.
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CONS:
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è The short term borrowing of IGB had increase significantly.
è RM 1,256,267,000 (78.9% of the total loan during in 5 year time) is going to be due in 2016.
è IGB cash reserve is insufficient to pay the RM 1,256,267,000 loan in 2016.
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Conclusion
http://ivkls.blogspot.my/2015/11/stock-review-igb1597.html
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The borrowing of the IGB mainly is in the IGBREIT level. Below are the information of cash & borrowing of IGB & IGBREIT as at FY2014.
Cash(m) Debt(m) Net debt(m)
IGB - 1,100 (2,146) (1,046)
IGBREIT - 232 (1,223) (991)
From above, we can see that the net debt of IGB excluding IGBREIT is about 55m which is insignificant.
For IGBREIT, the borrowing of RM1.2b appears to be huge but it just represents about 25% of the market value of mid valley and garden combined and below the borrowing limit of REIT of 50% of its asset
The cash balance is not able to repay the borrowing when it due in FY16, but the company is most likely able to refinance its borrowing as it is charged against to Mid Valley mall which is a prime retail assets and provides a stable and recurring rental income of 300m pa and the interest payment is 55m pa and is just about 20% of its rental income.
2015-11-02 11:27