Logic Invest Research Blog

Author: loginvest   |   Latest post: Wed, 8 Jan 2020, 4:53 PM


Amcorp Properties Bhd - 2Q FY 2020 Update Report

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Economic conditions in Europe, UK, Malaysia, Singapore and China continue to deteriorate. The recent rate cuts in Malaysia and around the region support our cautious outlook that we noted in our previous report. Property sentiment in UK and Europe continues to soften. Indeed, we are even less optimistic on property markets than we were in our previous report. Political risk continues to rise in many countries in Europe, including UK and Spain. For the next few quarters investors can expect at best only a slight upward bias in the share price. However, at current prices the shares are yielding more than 6.0%, based on our conservative dividend payment estimates.


Risks to our recommendation and target price include: i) softness in property demand, ii) an increase in the general level of interest rates, and iii) an increase in the cost of building materials. Amprop has significantly increased its debt level over the past year. However, the recent issue of RCPS has reduced callable debt levels substantially


We maintain our HOLD recommendation on Amcorp Properties Bhd (“Amprop”) and reduce our fair value estimate to MYR 0.46. Amprop is a steady dividend payer and will likely maintain prospective yields above 6.0% over FY 2020-2021. Over the last few years the company more than doubled its total debt to owner’s equity. However Amprop has recently issued another RCPS which has been used in part to reduce bank borrowings. At levels below MYR 0.40 Amprop will be attractive to value investors. However as investment sentiment in Europe and China seems quite fragile, we deem it prudent to reduce our target price a bit


Amcorp Properties Berhad, formerly AMDB Berhad is a Malaysia-based company, primarily engaged in investment holding activities. The Company's operations comprise three segments: Property, Engineering and Infrastructure, and Others. Property includes Property development, property investment and property management services. Amprop has recently announced two JV agreements involving property investment in Singapore and Shanghai. The Singapore agreement involves a commitment of about MYR 73 mn whilst the Shanghai deal involves a commitment of about MYR 94 mn. The Shanghai office block deal closed Aug 2019.

Source: Wilson & York Securities Research - 14 Nov 2019

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