MK Land seen under pressure due to ‘unstable’ earnings

PETALING JAYA: PublicInvest Research has maintained a “neutral” call on MK Land Bhd at an unchanged price target of 35 sen, as it expects earnings to come under pressure with no key drivers to steer earnings forward in the near term.

The group recorded a net profit of RM5.61 million for the fourth quarter ended June 30, which is 34.33% higher than the net profit of RM4.17 million recorded a year ago. Revenue on the other hand declined by 17.55% to RM192.36 million from RM295.06 million.

Full-year net profit expanded to RM18.13 million, which is 11.05% higher than the previous year’s net profit of RM16.33 million. Revenue on the other hand declined by 34.81% to RM192.36 million from RM295.06 million last year.

Although the earnings recorded are within the research house’s estimates, PublicInvest Research opines that with no new launches and the current weak market environment, the group’s earnings could decline, assuming that new projects or land sale are forthcoming.

“We believe the group’s asset monetisation plans might take longer than expected due to the tough current operating environment. That said, the group is in a better shape financially now and hence not urgently looking to dispose assets if prices are not attractive enough. To recap, among the land earmarked for sale include its Setiawangsa land and a 5-acre piece in Damansara Perdana. Recently, it disposed approximately 195.8 acres in Taiping for RM72 million,” it said.

The group’s legal tussle with the Inland Revenue Board (IRB) may only aggravate the situation further, as it is expected to bog down stock price performance in the near term.

MK Land’s unit Saujana Triangle Sdn Bhd had obtained a stay order from the Court of Appeal against the IRB’s notices of assessment to the company. Case management has been scheduled for Sept 14.

MK Land shares were untraded at 26.5 sen last Wednesday.