Monday 14 July 2014

L&G: Towards RM500mil Market-Cap

From news report last week, L&G's management aims to achieve a market capitalization of RM500mil by the end of 2014 or in early 2015. It might also give bonus issue next year.

Currently L&G's market cap stands at approximately RM397mil at share price of 57sen. To reach RM500mil market cap, it is still 26% short. Does the management hint that its share price will appreciate 26% to 72sen by year end?

Actually it's not that way. L&G's management expects shareholders to convert their loan stocks (ICULS) to ordinary shares to increase its market cap.

As of today, L&G has 695.7mil issued shares & 500.9mil ICULS. Its total mother shares have increased by 10% since Dec 2013 due to conversion of loan stocks.

L&G's FY14 ended Mac14 generates a PATAMI of RM75.3mil, which is a superb 71% improvement from FY13's RM44mil. Its 50%-owned Elements @ Ampang project is fully completed while the wholly-owned Damansara Foresta phase 1 is only 30% completed.




If all ICULS are converted to mother shares, L&G's diluted EPS for its FY14 should be at 6.3sen. This makes current share price at 57sen quite attractive.

As L&G will only launch its next project in the first quarter of calendar year 2015, its next 3 quarter's earning (FY15Q1, Q2 & Q3) will be mainly supported  by Damansara Foresta phase 1 which has a GDV of RM800-900mil.

L&G plans to launch 3 projects with total GDV RM2bil early next year, which are:
  • Elements@Ampang: 4 towers, 1,000 units, GDV RM800mil (50:50 JV)
  • Foresta phase 2 & Tuanku Jaafar Seremban: combined GDV RM1.2bil

Meanwhile, L&G also plans to convert its 2,500 acres of plantation land in Ladang Sungai Jernih, Lembah Beringin, to a township with a GDV of RM100 BILLION! (any typing error?)

The initial master plan of this northern Selangor new township may be unveiled as early as next year!


       Possible site of L&G's land. Is it too far away?


L&G has about RM164mil of net cash in the end of Mac14. It will reward shareholders with its first dividend in n years. The dividend will be 2 sen per share, representing RM23.9mil or 31.8% payout if all loan stocks are converted to mother shares.

If L&G is able to achieve 50% sales from its RM2bil worth of projects launched in 2015, then I think it should be good enough.

As for the RM100 billion township, the location seems not as strategic & promising as southern Klang Valley...

6 comments:

  1. do u think L&G worth to invest? I'd been eyeing for this counter for quite some time.

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    1. For me I'll watch first. Perhaps worth for long term but I'm not too confident it can repeat the phenomenal take-up rate for its subsequent luxurious properties.

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  2. the best time to invest in L&G is over. U will make a fortune if u invested in it's LA-R when it was first trade below 10sen

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    Replies
    1. May be can still earn a bit, as it's still a bit undervalued :)

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  3. Dear BD, given that L&G has since rise 18.4% since your last article, is currently price 0.675 attractive? If yes, what is the short term target price and mid term TP?

    Please advice.

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    Replies
    1. I don't have a TP for L&G. If loans stocks are to be considered, current price is fully valued as mentioned in this article, but I think this stock has momentum to go higher. If you are confident that its FY15 will be better than FY14, then it might still be a good investment.

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