The purchase price should be about RM317 per sq ft.
So it will be RM4.2mil pre-tax rental profit for Keladi. This is equivalent to 14% of its previous FY's PBT which seems not bad indeed.
But, its FY14's interest income of RM4.1mil will be reduced substantially for sure, and it has to start to serve the loan interest afterwards.
Keladi recent projects are Taman Lagenda near Padang Serai and Taman Kulim Square Indah near Kulim town. As at 31 Jan 2014, it has sold a total of 3,825 units of properties from these 2 projects, with nearly 100% take-up rate.
Its PATAMI in FY14 is lower at RM21.5mil compared to FY13's RM53mil due to the one-off gain in FY13.
Keladi is not too generous when it comes to dividend even though it is cash rich. It paid 0.5sen dividend per share for the last 3 years. For FY14, this will be about 18% payout from PATAMI, and a yield of only 1.4% at share price of 35sen.
So I don't expect it to pay more dividend when it turns into net debt after the land acquisition.
I'm not too sure about the property demand in Kulim but I'm not too optimistic. Furthermore most of Keladi's land are located far from Kulim town.
Even an airport in International tourist city can't survive...
Keladi's share price is not undervalued at the moment and its near term prospect is a doubt. It will be more exciting if it is ready to develop its land in KL or the new airport gets a green light.