Posted by kcchongnz > 2013-02-07 22:29 | Report Abuse

Plenitude, a deeply undervalued stock?
The net asset backing (NAB) of Plenitude, a property development company is RM3.11 per share while its share is trading at the close of RM1.79 on 6th February 2013. Is Plenitude really undervalued as judged from the price-to-book value of just 0.57? We would have to look at what constitutes its net asset value from its balance sheet.
Plenitude has RM367m cash and cash equivalent and zero debt in its balance sheet as at 30/6/2012. This cash is equivalent to RM1.36 per share, or a huge 76% of its present share price of RM1.79. It has RM214m worth of property development projects, RM251m worth of land held for future property development, and RM47m worth of investment properties. A check in its 2012 annual report shows that a lot of the land and properties were acquired some years ago and many of them have not been revaluated to its market value. Hence it is conservative enough to assume that the total value of these assets is as what it is stated in the latest annual report on 30 June 2012 with a total value of RM512m, or RM1.90 per share. It has a total of RM63.4 m as receivables and inventories in the balance sheet. Taking 50% of these as liquidation value, it is worth 18 sen per share. As for other assets such as plant and equipment, goodwill, tax recoverable etc in the amount of RM57m, it is assumed that the liquidation value is zero to be on the conservative side. Plenitude has total liabilities of RM154m, which amounts to 57 sen per share. Hence a modified Benjamin Graham net-net valuation will give a fair value of RM2.86 per share (1.36+1.90+0.18-0.57) for Plenitude, as opposed to its market price of RM1.79.
It would be silly to assume that Plenitude is going to liquidate its assets and ceases to be an on-going concern. Plenitude has a lot of valuable land in Penang, Petaling Jaya, Kuala Lumpur, and Johore, if developed, would provide a lot of future income for its shareholders. Most of this land was acquired at low costs many years ago. One can see that the gross and net margin of its property development is well above 50% and 30% respectively. However, return of equity (ROE) is not satisfactory at just 8.6% last financial year, down from 11.4% the previous year, mainly because of its low volume of development, and high cash holding. Plenitude produces huge amount of free cash flows in tenths of million consistently every year. Last year, FCF was RM25.7m, amounting to a great 12% of revenue. However, this FCF is way below its average of RM80m for the last 5 years. Will development accelerates; earnings and FCF improve further after the GE when all uncertainties are removed?
Plenitude, at RM1.79, is trading at an undemanding PE ratio of 6.7, not much different from its 10-year historical PE ratio though. But as Plenitude holds huge amount of excess cash, cash not needed for its ordinary operations, a more appropriate method of valuation is its enterprise value which less out its excess cash. In this aspect, the enterprise value is trading at an extreme low of about 2 times its earnings before interest and tax. Is it then a good investment?
A simple valuation of Plenitude using ROE of 8.6%, a required return of 10%, its NAB of RM3.11 will yield a fair value of RM2.66 (8.6%/10%*RM3.11), still about 50% above its present price of RM1.79.

Posted by necro > 2013-02-07 23:41 | Report Abuse

Wat about Glomac and Hua Yang mr.kcchong?

Posted by Fat Cat Tim Buddy > 2013-02-08 00:48 | Report Abuse

It will be nice if you leave some space in between lines.. it will be much more easier to read..

Posted by King Kong73 > 2013-02-08 07:43 | Report Abuse

Kcchong... powerlah your analysis...terbaik!

Posted by razmry > 2013-02-08 09:41 | Report Abuse

Thumbs up KC...

Property in my radar PTARAS, Huayang, KSL.

Posted by bryan_su > 2013-02-08 09:44 | Report Abuse

dun forget dijaya

Posted by iafx > 2013-02-08 10:10 | Report Abuse

then the DY must be very good according to the valuation, or is it? good enough to buy a small house? hahahaa, don't mistakenly thought company income is automatically an income to retail shareholder, what company has is what u will have ... only in yr dream.

selection of property stock should follow DY, there r property stocks DY can touch 7%. fundalmental valuation is good to know only, afterall, undervalued property stocks while; overvalued property price!

Posted by tptan45 > 2013-02-08 10:14 | Report Abuse

As an investor, I would like to invest in a company that is growing, year after year, quarter after quarter. I think only Hua yang fits that criteria here.
My emphasis has always been on growth, with manageable debts of course.

Posted by bryan_su > 2013-02-08 10:15 | Report Abuse

property stock is for trading only...

Posted by tptan45 > 2013-02-08 10:24 | Report Abuse

@bryan, why do you say that? just want an opinion.

Posted by garlic > 2013-02-08 10:29 | Report Abuse

alexlulu deleted his posts at wee hours this morning

Major shareholders :-

1) Ikatanbina Sdn Bhd - 45.49% (Madam Chua Elsie)
2. Fields Equity Management Ltd - 19.59% ( acquired from Bee Kuan Ong back at year 2010 )
3. En Primeurs Sdn Bhd - 7.33%
4. Bus Info Plus Sdn Bhd - 4.99%

which are the owners you are referring to alexlulu ? Nothing much can be found on the listed top four major holders.

Couldn't find any political related as well.

@kcchongnz :this Ir Teo Boon Keng Independent Non-Executive Director, your friend ?

Posted by alexlulu > 2013-02-08 10:32 | Report Abuse

garlic. i tot i better dont disturb kcchong la.

Posted by garlic > 2013-02-08 10:33 | Report Abuse

there must be a reason for you to say so. i believe kcchongnz also would like to hear your opinion

Posted by alexlulu > 2013-02-08 10:35 | Report Abuse

kcchong would be offended la. he is a FA guy mah. my opinion always clash with FA guy. better dont kacau the senior here.

Posted by iafx > 2013-02-08 10:35 | Report Abuse

everyone wants a continue growing company - but that is not enough in real world, u also want the share price grow with it, realistically speaking, good DY is one of the must-have catalyst to grow property stock price, and that depends not only how much cash in-hand, land acquired bla...bla..bla, these r juz layman terms.

diyaya, not long ago, demonstrated how a "private" land turn into "public" land, with handsome millions of $$$ ... bs transaction really, but what can retailers do? u can only wait if it married with ms - another fatcat company.

yr $ yr choice, of cos.

Posted by garlic > 2013-02-08 10:46 | Report Abuse

@kcchongnz: I saw Melvin G post on Selangor Properties Bhd. They are running it like typical china man S/B company.

They owns quite numbers of recurrent revenue generating properties

Posted by Joshua Lee > 2013-02-08 11:15 | Report Abuse

KC, I've been holding Plenitude for more than 1 year but sad to say it has disappointed me during this period. I am suffering paper loss now as I bought it at 2.13.

While I do agree that it is undervalued and financially solid, it is perhaps too conservative. There has not been much activities for the past 1-2 years leading to falling profits and dividends too. In other words, there is no growth and with falling dividends and share price.

Having said that, I will still hold it at least for a few more quarters to see whether the management will be more "aggressive" after GE13.

Posted by Melvin G > 2013-02-08 11:29 | Report Abuse

SPB might be good for another 3-5 years. Stable price and 10% dividend yield. 1 downside was not really active and low transaction volume for the current stage.

Posted by millionaire > 2013-02-08 11:30 | Report Abuse

I like Tambun Indah, attractive dividend, smile :-)

Posted by Melvin G > 2013-02-08 11:31 | Report Abuse

Break up your fund into 4 parts, accumulate 25% now, 25% after GE, 25% when klse stablize, 25% when klse is uptrending.

Posted by razmry > 2013-02-08 11:38 | Report Abuse

I keep keladi for quite some time in hand. Make few times profit and they pay dividend too. Sometimes quite high sometimes low. That is the reason why I keep it look for dividend and get ready for trading gain. And will buy back once goes down.

The drawback of this counter, many times no volume.

Posted by kcchongnz > 2013-02-08 11:59 | Report Abuse

Posted by iafx > Feb 8, 2013 10:10 AM | Report Abuse
then the DY must be very good according to the valuation, or is it? good enough to buy a small house? hahahaa, don't mistakenly thought company income is automatically an income to retail shareholder, what company has is what u will have ... only in yr dream.
selection of property stock should follow DY, there r property stocks DY can touch 7%. fundalmental valuation is good to know only, afterall, undervalued property stocks while; overvalued property price!

This is what I call constructive criticism I am looking forward to. Though the comments are "filled with bones", I certainly very much welcome. Anyway, I am not peddling for this stock though I am a shareholder. First point Plenitude has been making huge amount of profit and free cash flows in the past. It has huge amount of cash amounting to RM1.36 per share in its balance sheet. But do shareholders enjoy them? Definitely not. Dividend has been meager. Last year dividend has been reduced from normal 7.5 sen per share to just 5 sen, or a disappointing 2+% dividend yield, extremely disappointing in view of its amount of cash it has. Yes also what the company has may not belong to minority shareholders, looking at the corporate decisions made so far. How I hope as a shareholder, i can get a dividend yield of more than 7% as stated by you. But if the company is undervalued, and it give high dividends, good growth prospect, good corporate governance etc, do you think Plenitude will still be traded at RM1.79? Btw, could you share with us property company with good prospect and the high dividend yield as stated by you?

Posted by iafx > 2013-02-08 12:04 | Report Abuse

r u focus on the property stock or simply childish? this forum does not belongs u. do us a favor, next time cut yr message into summary, don't write long grandmother story.

sifu .. ?! not even tau-fu!

Posted by kcchongnz > 2013-02-08 12:08 | Report Abuse

Posted by bryan_su > Feb 8, 2013 09:44 AM | Report Abuse
dun forget dijaya

Posted by razmry > Feb 8, 2013 11:38 AM | Report Abuse
I keep keladi for quite some time in hand. Make few times profit and they pay dividend too. Sometimes quite high sometimes low. That is the reason why I keep it look for dividend and get ready for trading gain. And will buy back once goes down.
The drawback of this counter, many times no volume.

I am just concern about the credibility of the management/major shareholders. There is corporate governance issues here, I suspect. To me, the credibility of the management is one of the most important criteria to invest in a company.

Posted by razmry > 2013-02-08 12:17 | Report Abuse

Errr!!! Guys... Can we calm down... Lets discuss professionally okey...

I believe most of us come here to looks for information then the way how we invest is at our own risk. Lots of valuable information share by both of you will justify people like me to invest/trade peacefully and with strong basis...

I hope to learn more from you guys, gain information and sharing ideas..

Posted by kcchongnz > 2013-02-08 12:18 | Report Abuse

Posted by alexlulu > Feb 8, 2013 10:35 AM | Report Abuse
kcchong would be offended la. he is a FA guy mah. my opinion always clash with FA guy. better dont kacau the senior here.

hahaha alexlulu, how could I get offended when I am asking for constructive criticisms when I post? First of all, it is a sharing of knowledge, not peddling for stocks I have, seriously. I love constructive criticism which is good for me and everyone else. But just don't accuse me of bullshitting, copycatting, and other demeaning statements, without substantiating your claim, because this can hurt a person's feeling, not good. Another thing to remember, mine is just an opinion of a small time retail investor. It won't make you money trading in the market. Yes, it is based on FA, the only little thing I know. No point also telling me the share no liquidity, cannot go up etc as I am not a TA guy and won't know if the share or market can go up or not, though it is perfectly ok to say so.

Posted by razmry > 2013-02-08 12:19 | Report Abuse

Thanks KCchongnz for your advice, will look into it...

Posted by alexlulu > 2013-02-08 12:21 | Report Abuse

i didnt say u bullshting copycating watsoever wor. read carefully. therefore better dont comment to senior forumner.

Posted by nightmare > 2013-02-08 12:22 | Report Abuse

he is referring to someone else la alexlulu not referring to you.

Posted by kcchongnz > 2013-02-08 12:23 | Report Abuse

ifax, sifu? Who claims he is a sifu? Neither is this forum belong to you. does it? Btw why so furious? Did I say something wrong? I am just looking for your expert opinion. Coe on don't be childish. Show us what you have. You must be expert because you call people tau fu.

Posted by alexlulu > 2013-02-08 12:24 | Report Abuse

ic. thks nite.
as i said. to me, everyone has the right to express their opinion, right or wrong. as long not ridiculous or misleading.

Posted by nightmare > 2013-02-08 12:25 | Report Abuse

mind to let us know what you know about the owners of the company as per garlic post ?

Posted by alexlulu > 2013-02-08 12:32 | Report Abuse

a while ago Ooi shouting buy L&G i make similar comment n i deleted also.
in bursukland u need to knw the real owner of the company. not the reported one, and know their character and intention of having this co listed. and their game plan.
all those factors already make Financial Analysis useless in MOST stock. therefore u dont see foreign fund in those stock despite supergood balance shit and super good prospect and super good margin of safety.
conclusion. FA has very little chance of making a fair return in bursukland. FA ppls dont attack me har. i would still want to learn from u guys in FA. but not in using in bursukland.

Posted by nightmare > 2013-02-08 12:34 | Report Abuse

can re-post the same comment back? i think i didn't get the comment on the L&G

Posted by kcchongnz > 2013-02-08 12:35 | Report Abuse

Posted by Joshua Lee > Feb 8, 2013 11:15 AM | Report Abuse
KC, I've been holding Plenitude for more than 1 year but sad to say it has disappointed me during this period. I am suffering paper loss now as I bought it at 2.13.

ME:Joshua, you are not alone here. An undervalued stock can remain undervalued for long long time. Hence one may not get his expected return investing in it.

[While I do agree that it is undervalued and financially solid, it is perhaps too conservative. There has not been much activities for the past 1-2 years leading to falling profits and dividends too. In other words, there is no growth and with falling dividends and share price.]

ME:you are right to the point above. Hopefully they start on more development after GE.

Posted by alexlulu > 2013-02-08 12:36 | Report Abuse

u can ask Ooi la. bcos he is a sifu status and has many followers i dont want to upset him la. he is a nice n fair guy.
my comment very radical one la. i always try to tone down.

Posted by nightmare > 2013-02-08 12:38 | Report Abuse

after you post , i read it, then you delete it if you are afraid it might offend someone. ok?

just would like to know what you know about the owners of the compnany

Posted by nightmare > 2013-02-08 12:40 | Report Abuse

i believe more people would like to know your view on the company owners beside from me & garlic

Posted by alexlulu > 2013-02-08 12:41 | Report Abuse

20 yrs in the industry aggresively n intensively....

Posted by nightmare > 2013-02-08 12:44 | Report Abuse

what's that got to do with the major shareholders of Plenitude ? feel free to comment, i think a lot people also would like to hear that including kcchongnz i believe

Posted by kcchongnz > 2013-02-08 12:45 | Report Abuse

garlic, i don't know what alexlulu talking about in the his deleted post. I didn't have a chance to read it. alexlulu seems to have a lot of negative perceptions about Bursa. But a lot of these to me can be true. I don't agree with his statement, "conclusion. FA has very little chance of making a fair return in bursukland. FA ppls dont attack me har. i would still want to learn from u guys in FA. but not in using in bursukland" though.
For Plenitude, what I know is it is a highly political-linked company. That was why it sapu all those choice property land at low price years ago. Those major shareholders listed in their annual report are likely not the true owners. Yes, it is a possibility that what the company has may not belong to the minority shareholders eventually. This is Boleh Land. However I took the chance that may be majority of the assets will belong to every shareholder.

Posted by alexlulu > 2013-02-08 12:46 | Report Abuse

no further comment needed. happy cny. huat ahh!

Posted by alexlulu > 2013-02-08 12:52 | Report Abuse

nite, why dont u go n ask how datinwong knew abt MBF privatisation is rm1.50 exactly 6 month ago? does any FA guy came out with exactly that figure during the past 6 months?

Posted by nightmare > 2013-02-08 12:55 | Report Abuse

because she or more precisely he is directly involved with the deal :), else how he know ? :)

Posted by nightmare > 2013-02-08 12:56 | Report Abuse

he already mentioned got 20 years of experience in the field mah :)

Posted by alexlulu > 2013-02-08 12:56 | Report Abuse

this bolehland n bursukland cannot use math to measure one la. why we called bolehland in the first place, no logic mah. so if u follow logic u die faster.

Posted by alexlulu > 2013-02-08 12:57 | Report Abuse

nite, why isnt the news leakout for 6 months?

Posted by nightmare > 2013-02-08 12:58 | Report Abuse

lol, should ask datinwong to resurface.

going back hometown now, happy CNY to all i3 folks :)

Posted by nightmare > 2013-02-08 13:00 | Report Abuse

shit....that questtion stopping me to turn off my labtop...

Posted by alexlulu > 2013-02-08 13:00 | Report Abuse

huat ahh!! happy CNY to all.