1QFY6/09 results were above expectations – MK Land swung from a massive net loss of RM38m in 4QFY08 to a net profit of RM4.9m, well ahead of our full-year loss forecast of RM2.7m. The deviation came from higherthan- expected sales and revenue recognition as well as the absence of provisions as the company had cleaned up its balance sheet in FY08. As expected, MK Land did not propose any dividends in 1Q or a final dividend for FY08 due to its huge losses for that financial year.
Maintain TRADING BUY. We are raising our FY09 forecast from a loss to a net profit of RM12.6m while FY10 net profit is upped from RM3.7m to RM18.3m in view of the group’s more aggressive move to flog unsold stock and get construction work back on track. It is encouraging that MK Land is working hard to return to the black this year and is actively pursuing a land disposal strategy to address its financial woes. We make no changes to our TRADING BUY call or target price of 28 sen which we continue to base on an 85% discount to RNAV. Re-rating catalysts include
1) the good 1Q results, 2) a successful second tender for the 23 acres of land and
3) greater clarity on Tan Sri’s plans for repositioning the group.
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