KSL 顺利实业 5038 Rm 3.70 机会进场---

Published: Saturday August 16, 2014 MYT 12:00:00 AM
Updated: Saturday August 16, 2014 MYT 7:04:53 AM

KSL strategy pays off

KSL Holdings Bhd's main rental income contribution comes from KSL City, the integrated development in Johor Bahru city centre comprising a mall, a five-star hotel and two blocks of serviced apartments.
KSL Holdings Bhd's main rental income contribution comes from KSL City, the integrated development in Johor Bahru city centre comprising a mall, a five-star hotel and two blocks of serviced apartments.
SPEAK of the Johor property market and it brings to mind the myriad players, foreign and local, who are riding on the Iskandar Malaysia masterplan.
For KSL Holdings Bhd, where Johor has always been its playground, the secret to its well-run business is in knowing what the locals want and sticking to areas its knows how to extract the best returns from.
To reflect that, KSL has shown a strong set of financial figures in the past three years as its projects in Johor Bahru and Klang took off.
Providing that significant boost to the numbers was also its rental income from its KSL City integrated development just 10 minutes away from the Johor Bahru Customs, Immigration and Quarantine Complex.
The group also has rental income from two properties leased to grocery chain, Giant in Muar and Nusa Bestari.
In its 2013 financial results, KSL recorded earnings of RM172.4mil, 35% higher than a year ago. Its revenue for the year was RM688.2mil. Of that, RM135mil was from rental while RM551mil came from property sales.
For 2014, its first quarter ended March 31 continued its upward momentum, recording RM61.03mil in net profits, 27.5% higher than the corresponding period a year back.
Revenue more than doubled to RM207.92mil.
Executive chairman Ku Hwa Seng believed that the second quarter results would be good as well, and the outlook for the second half of the year positive.
Contradictorily, the group has not been generous on its dividend payout in the past three years.
Ku admits that the group has not rewarded its shareholders although prior to 2011, the group had consistently distributed dividends.
“We have been investing a lot into our business. Therefore, we have held back our dividend distribution since 2011,” Ku says.
The executive chairman says he intends to bring up a dividend reinvestment plan in the next board meeting, taking heed from a suggestion given by a shareholder in its annual general meeting in June.
“Nothing has been discussed yet but the idea is to partly give out shares as dividend,” he says.
At the moment, KSL has several ongoing high-rise and landed property projects in Johor Bahru. Ku notes that the projects are overall 70% taken up, to which a property market observer says is a good rate against the backdrop of the current property market.
“Most developers need at least 50% take-up rate to break even. Do note that KSL has low land cost in addition to the reasonably good take-up rate,” the market observer points out.
To date, the group has an unbilled sales of just over RM1bil. Its sales target for the year is RM1bil as well and Ku says the group has achieved almost 75% of that year-to-date.
KSL’s remaining gross development value (GDV) is estimated to be RM4bil to RM5bil.
A banker familiar with property deals highlights that the Johor property market is very sentiment-driven. While the Malaysian property sector has softened this year, KSL’s financials suggests that it could weather the slowdown comfortably, the banker says.
“Looking at its segmentised earnings, KSL has an estimated profit after tax margin of 28% to 29% from its property development business.
“That is among the highest margins in public listed property developers and I think that can last the group another six to seven quarters. By then, the Johor property market could be buoyed again by any newsflow on the High Speed Rail,” the banker foresees, assuming KSL does not embark on aggressive landbanking.
The source adds that KSL would appear to be a good alternative to UEM Sunrise Bhd, especially for investors who want exposure in the Johor property market but believe that the principal developer of Iskandar Malaysia is already overexposed among investors.
KSL’s share price has been on the uptrend in the past several weeks. It closed eight sen higher at RM3.70 yesterday, making a year-to-date return of 68%.
A source says that funds have been taking note of the undervalued counter; among those who were said to be interested were Permodalan Nasional Bhd, Pelaburan Mara Bhd and some insurance firms.
KSL has a market capitalisation of RM1.4bil and is trading on a current price-to-earnings of 7.54 times.
Homeground advantage
Ku agrees that the Johor property sector has seen a lot of newcomers in the past few years but while competition is tough, KSL has been able to beat that with its advantage as a Johor-grown property group.
“Yes, there have been many new players in the market like the China developers and those from Kuala Lumpur but most of them are at the seaside or waterfront, which are better locations. But this means they are out of the conventional development areas, which is where we have always been operating,” Ku compares.
Another of KSL’s winning point is its low land cost from as far back as the early 2000s, before Johor was marketed as Iskandar Malaysia.
Ku, one of the three sons at the helm of the business started by his father, shares with StarBizWeek that the cost for the group’s land bank accumulated in and around Johor Bahru over 10 years ago were between RM3 to RM6.50 per sq ft.
“The later ones are a far cry from the prices we could get back then. Our latest purchase of a small piece of land in Kangkar Tebrau was RM150 per sq ft,” he notes, adding that this was adjacent to KSL’s land which transacted at RM8 per sq ft 10 years ago.
Today, land prices in coveted areas within the Iskandar Malaysia development blueprint could cost as high as RM1,000 per sq ft.
Aside from locking in the low land cost, Ku says KSL’s products are targeted at a slightly different market, mostly of Johoreans and Singaporeans. Many of the latest developments in the Iskandar Malaysia region are priced beyond RM1mil.
“Not many commonfolk are actually able to afford property units priced above RM1mil,” he notes realistically. “Although we are moving towards building more high-end residentials, we have kept our high-rise prices affordable at a range of RM500,000 to RM700,000.”
Although Iskandar Malaysia has attracted a number of competitors, KSL has also benefitted from the attention on its homeground. For one, it has pushed Johor’s property market onto the portfolios of many foreign investors from Singapore as well as China, Hong Kong and Taiwan.
Foreign buyers make up nearly 20% of KSL’s total purchasers and the bulk of that comes from across the Causeway. Though most buy to invest, a fraction of KSL’s Singaporean customers are homebuyers who prefer to live in Johor Bahru and commuting to Singapore for work.
On the recent Causeway toll hike, Ku believes it will not dampen the sentiment for Johor properties among Singaporeans as the city-state dwellers loved to travel out.
“There is a kneejerk pull-back as the market adjusts to the new toll rates but (the Singaporeans) will return. They visit Johor because they can escape the crowd in Singapore. From here they can travel up north to Malacca, Kuala Lumpur and even Thailand,” he says, brushing off the notion like a housefly.
As at December 31, 2013, the group’s land bank spans 2,100 acres held for current and future development strategically located in Johor Bahru, Batu Pahat, Kluang, Segamat, Muar, Mersing, Klang and Kuala Lumpur.
Ku says the group is not actively looking to replenish land bank in areas it is not already in.
In its 2013 annual report, KSL says most of these properties will help sustain the group’s medium to long-term development and profitability. The properties are available for immediate development as they have been granted approval for sub-division.
For the rest of 2014, it aims to launch three new projects including the low-density serviced apartment, 18 Madge in Kuala Lumpur city centre, and continues with its repeat launches for ongoing projects.
Going forward, the group plans to build more high-rise residentials as “the trend is that now, that is what the market wants”.
ksl 土地与股东情况---