STOCK FOCUS OF THE DAY
MKH : Expands solid growth story beyond
Kajang
HOLD
We initiate our coverage on MKH Bhd (MKH) with a BUY
recommendation and a fair value of RM3.00 per share, based on a sum-of parts
(SOP) valuation. While property development and oil palm plantation are MKH’s
core businesses, it has diverse business interests, spanning a wide range of
sectors that includes investment property, property management, construction,
trading and furniture manufacturing.
Since its founding, MKH has thrived, transforming Kajang
into one of the fastest-growing townships in Malaysia, becoming part of Greater
Kuala Lumpur. MKH is planning a total RM948mil of new launches in FY17,
focusing on affordable residential projects. Beyond FY17, it has several
developments with potential GDV of RM9.0bil. MKH has been able to sustain its
new property sales level at around the RM800mil mark for the last 3 years
amidst the slowdown in the domestic property market. We believe this is due to
the group staying true to its core competency, focusing on the affordable
segment market.MKH recorded outstanding revenue growth, with its FY11-FY16
5-year revenue compounded annual growth rate (CAGR) standing at 32.8%.
We expect this strong track record to be sustained moving
forward, anchored by its property development and plantation divisions. Its
earnings growth has been more impressive than its revenue growth. It registered
FY11-FY16 5-year operating profit CAGR of 52.3%, while its 5-year net profit
CAGR stood at 40.1% for the same period. With a strong management team in
place, we believe the group will maintain this commendable track record in the
foreseeable future.
Other :
MISC : Expanding offshore
division HOLD
STOCKS ON RADAR
Leader Steel Holdings, HSS Engineers, Aeon Credit Service,
Malaysian Pacific Industries
ECONOMIC HIGHLIGHT
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NEWS HIGHLIGHTS
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IHH Healthcare : IHH dismisses report it’s close to
buying India’s Fortis
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jobs
JAKS Resources : Property unit turnaround takes time — JAKS
Resources
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The information and opinions in this report were prepared by
AmInvestment Bank Bhd. The investments discussed or recommended in this report
may not be suitable for all investors. This report has been prepared for
information purposes only and is not an offer to sell or a solicitation to buy
any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may
from time to time have a position in or with the securities mentioned herein.
Members of the AmBank Group Bhd and their affiliates may provide services to
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that stated facts are accurate and opinions fair and reasonable, we do not
represent that it is accurate or complete and it should not be relied upon as
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judgment as of this date and are subject to change without notice.
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