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Wednesday, June 15, 2011

Credit Suisse Research: 79% of Bursa-listed property stocks below book value (Edge)

Credit Suisse Research said 79% of the property stocks listed on Bursa Malaysia are below book value with PASDEC HOLDINGS BHD [] trading at the steepest discount of 76%while SP SETIA BHD [] is trading at the highest at 235% to its book value.

In its research note on Tuesday, June 14, it said the sector price-to-book had been relatively flat at 0.98 time from 1.0 times in January this year. As for their performance, the stocks had performed in-line with the market in the last three months.

“79% of Bursa-listed property companies are trading below book value. This, we believe, had sparked mergers and acquisition (M&A) activities, such as OSK Property and AP Land, and press anticipation on M&A activities in the sector,” it said.

According to its table, Pasdec is trading at the steepest discount at 76% where the price to book value (PBV) is at RM1.87 while its June 13 closing price was 46 sen.

The others are Nilai Resources Group Bhd, which traded at a 74% discount, South Malaysia Industries 74%, Eupe Corp Bhd 73%, Focal Aims Holdings 73% and SBC Corp Bhd 70%.

On the other side of the spectrum, SP Setia is trading at a 235% above its book value, UEM LAND HOLDINGS BHD [] 187% and YTL Land Bhd 153% followed by MAH SING GROUP BHD [] at 124%.

“Although there is value to be found, book values are not totally comparable. Newly listed companies have book values with land valued at more current market prices. ‘Old’ property companies have book values reflecting acquisition prices from years ago,” it said.

“We maintain our bullish stance on the Malaysia property sector. Our top M&A pick is Sunway City, pending merger with Sunway Holdings, which will create the third largest developer,” it said.

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