Magna Prima has neutral earnings prospect, earnings to recover FY18 onwards

KUCHING: Despite Magna Prima Bhd (Magna Prima) having neutral earnings prospect, analysts expect earnings of the group to recover from financial year 2018 ( FY18) onwards.

According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), Magna Prima has over 32 acres of landbank in Klang Valley where 25 acres of the land is located in Shah Alam.

“Besides, Magna Prima is having 6.96 acres of landbank along Jalan Gasing in Petaling Jaya,” MIDF Research said.

It added that collectively, the landbank is having remaining gross development value ( GDV) of more than RM2.2 billion which provide the company with five to seven years of earnings visibility.

In addition, MIDF Research noted that Magna Prima owns 2.6 acres of prime land in Jalan Ampang, which is located in the Golden Triangle of Kuala Lumpur and is close to Petronas Twin Towers.

The research arm further noted that Magna Prima has been reportedly putting up the Jalan Ampang land for sale.

Based on the latest book value of RM382 million of Jalan Ampang land, the research arm estimated Magna Prima to potentially realise disposal gain of more than RM200 million should the sale go through.

On a side note, MIDF Research pointed out that Hua Yang Bhd ( Hua Yang) emerged as Magna Prima’s largest shareholder in April 2017 after raising its stake in Magna Prima to 30.06 per cent from 10.84 per cent.

“We are positive on entry of Hua Yang due to potential synergies between the two companies considering the similar property exposures in Klang Valley.

“Besides, we expect Magna Prima to leverage on Hua Yang’s expertise in developing affordable housing,” it said.

MIDF Research forecasted FY17 earnings of Magna Prima to be lower at RM7.2 million, down 38.6 per cent year on year (y- o-y), due to completion of larger scale projects such as The Istana and The Avare in FY15-FY16.