MKLand - Selldown was overdone (CIMB)

Tan Sri’s willingness to talk to the press is a sign that MK Land is making progress in halting the vicious downward spiral it has been on over the past 4-5 years. Once the largest listed property company by market cap, it is a shadow of its former self with a market cap that has fallen by nearly 95% to less than RM200m. Although the fall in its share price was warranted by the collapse in earnings over the years culminating in a big loss in FY08, we believe the selldown was overdone. MK Land’s entire market cap can be covered by the 23 acres of land in Damansara Perdana alone, not to mention the other 530 acres in the strategically located township. At 15.5 sen, MK Land is priced to fail. We are keeping our earnings forecasts, 28 sen target price (still based on 85% discount to RNAV) and TRADING BUY recommendation. Potential share price triggers are 1) the positive plans laid out in the press briefing, 2) its return to profitability in last Thursday’s 1QFY09 results, and 3) a successful second tender for the 23 acres of commercial land.