Analysts upbeat on MKH’s JV to develop property

KUCHING: Analysts are positive on MKH Bhd’s ( MKH) latest joint venture with Sim See Hua Group to undertake property development on a 130- acre (52.6 hectare) of land in Kajang, Selangor.

AllianceDBS Research Sdn Bhd (AllianceDBS Research) in a report yesterday said the joint venture is synergistic to MKH as the land is located next to the company’s existing 270- acre (109 hectare) Kajang 2 township development which will be linked to a KTM commuter station in the future.

The research firm noted the land, with an estimated gross development value (GDV) of RM1 billion will also boost MKH’s property segment total GDV by nine per cent to RM12 billion.

It observed 60 per cent of MKH’s property projects are located within the growing Kajang or Semenyih corridor.

On another note, AllianceDBS Research said the landowner’s entitlement of RM238.95 million for the 52.6 hectare land will be paid progressively over eight years, implying RM42 per square feet ( psf).

With progressive payment for the land, the research firm noted the method bode well for MKH as it allows the company to focus on the delivery of its record high RM843 million unbilled sales.

Meanwhile, MKH told Bursa Malaysia last Friday that Suria Villa Sdn Bhd, a wholly- owned subsidiary of the company had entered into a joint venture agreement with Sim See Hua Group to undertake the development of housing and other type of development on the 52.6 hectare land.

The land provides an opportunity for the group to strengthen its presence in Kajang to participate and benefit from the on- going Mass Rapid Transit ( MRT) development which is strategically located in Kajang- Semenyih corridor.

The joint venture was in line with MKH Group’s strategy in joint venture with companies which own strategically located land banks for the group’s future property development projects and is expected to contribute positively to the future earnings of the group.

Mo v i n g forward, A l l ianc eDBS Re sea rch believed MKH will launch more property development in Kajang 2 at a time period closer to the completion of the MRT in 2017.

The research firm was also confident that the company will be able to sustain its earnings growth in the near future derived from its property and plantation segments.

Wit h go od ea r n i n g s prospect s, Al l ianceDBS Research noted MKH’s share price of RM2.30 per share as at August 7 was traded at an attractive valuation of six times price- earnings ( PE) pegged to financial year 2016 ( FY16) forecast earnings per share of 37.3 sen.