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Thursday, April 17, 2014

L&G aims for similar success (Edge)

Not rated with target price of 68 sen: Following the success of its maiden foray in Ampang, Kuala Lumpur, with its residential development called Elements @ Ampang, L&G is taking another jab at Ampang.

The group recently acquired a 5.66-acre (2.29ha) leasehold commercial land adjacent to Elements @ Ampang for a proposed mixed development project to be developed on a joint venture basis with Malaysia Land Properties Sdn Bhd (Mayland), which is known for its expertise in studio serviced apartments. This will mark L&G’s second collaboration with the latter after Elements @ Ampang.

The residential development has an estimated gross development value (GDV) of RM788.7 million.

We are expecting the per sq ft pricing for the residential component of the development to be in the range of RM800 to RM900, which will ensure a good take-up rate.

Other planned launches are Phase 2 of Damansara Foresta condominium in Bandar Sri Damansara (GDV: RM500 million) and the Tuanku Jaafar Golf & Country Resort project in Negeri Sembilan.

In the meantime, unbilled sales of RM600 million (as at February 2014) are expected to last the company through the next 15 months.

We are valuing L&G at a fair value of 68 sen, pegging 2014 earnings per share of 8.5 sen to 2014 price-earnings ratio of 8 times, which is the average of its closest peers.

L&G is a good trading stock, with the price uptrending in a cyclical fashion. It is a good stock to pick up on dips. The important thing is that at current level, we believe the stock is trading below its fundamentals. Provided that the broader market remains sound, we expect the cyclical uptrend in the price of L&G to continue. — MIDF Research, April 16

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