Rakuten Head of Research, Kenny Shen recommends a BUY on A&M Realty with target price of RM2.20 or a potential upside of 26.4% based on FY18 PE16x and 1.3x B/V. The valuation is premised on the higher end parameters as A&M is undergoing positive and exciting transformation ahead.
In a statement, A&M’s massive Gross Development Value (GDV) in the pipeline values at RM10.7bn over 1,410 acres of low cost land of which 75% is less than 1% of GDV. The company’s healthy balance sheet with zero borrowings (net cash RM64.1m) makes A&M an attractive value proposition.
A&M’s trump card is their Pulau Carey landbank measuring 1,938 acres with an estimated RM6.8bn
in GDV. This is expected to be boosted by potential spillover impacts from developments of an integrated maritime city on Pulau Carey. The development would be spearheaded by Sime Darby, MMC Corporation, Adani Ports & Special Economic Zone Ltd with total infrastructure investments of up to RM200bn.
A&M’s ongoing Amverton Cove Golf & Island Resort on Pulau Carey which sits on a 125 acres site has been in operation since 2013 remains a popular destination with more than 32,000 golfers monthly.
Furthermore, Amverton Cove integrated township green concept tourism theme development on 1,063 acres would provide superior earnings visibility of up to 2025. On-going property
projects include Amverton Links (Klang) and Amverton Hills (Sg Buloh) which is 70% completed
and ready for launching on 2H2017 with RM205.1m GDV.
Other divisions namely plantation and manufacturing divisions also continue to be profitable contributing more than 10% of total profit.
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