LogicTrading Analysis

Author: LogicTradingAnalysis   |   Latest post: Mon, 22 Jun 2020, 12:20 AM


Land & General Bhd (L&G) - IS READY FOR BOTTOM UP

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Land & General Bhd in short L&G (3174) is under our LTA Coverage as we see this stock is ready for a bottom up very very soon.


We choose to unveil to everyone at this moment because it's stock price still not yet move much. So that everyone can notice this undervalues stock !




This company has been long history in Bursa as already listed in BURSA stock market since 1968. Can last until today simply mean it's not a company that doing tricky stuff and go delist after some time. It's a solid and profitable company.


It's a company major in Housing Property, Township Development and Education.


To cut short, we tell you why we think L&G (3174) is ready for a bottom up very soon :



It's very obvious that latest two quarter Revenue and Profit is already improving and new High Revenue Profit for the past 3 years. Look at latest quarter already almost contribute 1 EPS, if next 3 quarter remain the same, rolling PE will become less than 5 !


To be sure it can sustain or doing better, we notice that latest quarterly result report under Prospect mention this :



After reading this prospect, we made no doubt immediately press our buy button to collect as soon as we can because we expecting this company stock price will hit bottom and rocket up soon. Once everyone have a deep study about it.


Key point above :


1. Stamp Duty waiver - Government initiative to boost property market

2. Bank negara reduce 25 point interest rate - Reduce buyer burden and increase investor appetite

3. Most importantly expecting coming financial year may improve.


And of course we have more study whether it's true and whether market buy the idea that Property Market really Bottom up, or at least L&G alone able to bottom up?



From this picture, 11/6/2019 just this month news have reported that PROPERTY market may finally bottomed out !!

But we need more evidence that the Property theme is exactly ready to be bring up into Bursa Market as trader need more reason to buy up the stock.


Yes, its the rate cut that potential come in July, which we expecting our Bank Negara might also follow to cut rate further down in future. And we already see Bank Negara did once last month, do not surprise that they lower the rate again in coming next few month. As whole world are cutting interest rate ! Lower rate mean better sentiment for Property Stock !


We may see a bull run of Property stock happen again like years 2013 and now is still at bottom !



We can also see that new Malaysia Government has putting many initiative to recover property market. Apart from giving waived, they push bank to give more access to first time home buyer !


More interestingly many Malaysian think Malaysia property already over price however for foreigner from Hong Kong, China, Western, Japan, Malaysia property are still very affordable and cheap !!





You can watch how Hong Kong artist laugh at our Malaysia Property that selling In Million but still consider cheap for them : https://www.youtube.com/watch?v=gYINMi8iPz0


We see this as an opportunity for investing in L&G as they have huge planning this year and we see it start billing and expecting more to come.




We have learn that during last year L&G already planned great timing to launch property this year and it worth RM 4.2 billion !!




Before we went too far, let's come back to see whether L&G have any values in term of stock price whether can go higher or not. 


We can obviously see that the company have asset worth RM 0.369 if they sell everything off, and we expecting more because L&G have many land and some may not yet revalues !!



Looking at their big cash balance, RM 218 million is equal to RM 0.0736 cent, which mean if we buying at RM 0.155 (last closing price as at 21/6/2019), 50 % half of it is cash and it's big because many company have less than 10% of cash compare to stock price.





And the company is giving dividend every year and the yield at this level is very good, it's going to entitle in July !

RM 0.01 dividend / RM 0.155 share price = 6.4% Dividend Yield


It's much better that many stock in Bursa and with such a cheap penny stock can get 6.4% can be said as it's crazily amazing and worth it ! It's definitely free as the upside potential of this stock yet to be mention !


We not even yet mention about their Education Business which showing steady income and improving ! 


It's a very big profitable Education business as it from pre school, kinder garden, primary until finish secondary !! One they join, they pay every semester until they finish form 5!


And we can see the surrounding area full of houses which is big population area.


The exciting part is that Education business always worth huge values as teachers, student are not easy to come by, we can see from most recent case that PARAMON sold off their Education business and bagging huge profit ! And going to give huge dividend !



Just to compare SRI KDU land and campus size with L&G Sri Bestari, we already can see quite obvious that L&G's Sri Bestari is much bigger and almost double compare to SRI KDU




Most interesting part is that both of this two school are actually very near ! Just 11.3 KM away!



With that we can safely estimate how much L&G' Sri Bestari actually worth !


According to a report by The Edge Malaysia, “Two Horses will acquire 69.7% equity interest in PESB for RM134.5 million cash, 80% in PEKSB for RM21 million and 80% in Sri KDU for RM385 million”. https://www.edgeprop.my/content/1553505/paramount-reducing-exposure-education-industry


PARAMON not yet even sold off the whole education unit already get a value worth RM 540.5m. If sold off fully based on calculation above, its roughly worth RM 700.46 millions !!

(PESB RM 134.5/69.7%x100% + PEKSB RM 21/80%x100% + Sri KDU RM 385/80%x100%)


Since SRI BESTARI size bigger than SRI KDU, we think that 

L&G' Sri Bestari easily worth RM 500 million to RM 1 billion!
If RM 500 million / Total L&G Share 2.973b = RM 0.168

If RM 1 billion / Total L&G Share 2.973b = RM 0.3363



L&G Education business alone already worth between RM 0.168 - RM 0.3363 much higher than current share price ! (RM 0.155)


Very undervalued stock ! Not yet even calculate L&G Property business and land values !



Lets just looking at technical chart to check whether it's ready for some movement:



We can see that Year 2005 after hit low and shoot high to RM 0.60.

Again year 2008 after hit low and shoot high to RM 0.50.

Year 2011 to year 2014 making Triple Bottom and shoot high to RM 0.55.


Year 2019 finally it hit the lowest again and forming a 14 years of TRIPLE SUPER BOTTOM.



If we zoom in closely, we already see that move out from the downtrend line, just recently, and we spotted big volume start appear this year and the price did not go lower, it's high possible that accumulation in progress and soon might have action of turning up.


As a conclusion,


1. Property market is recovering, goreng property stock theme is coming.

2. Revenue and profit is recovering, new high of 3 years and expecting to do better.

3. Dividend 1 cent is coming in July, high yield.

4. High NTA RM 0.369

5. Education Business worth big values, if sell off might double or triple up stock price.

6. Technically already making bottom, very low risk and high potential to bottom up.


My own personal "hope" for short term price to reach RM 0.22, mid term hope RM 0.35.

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