MK Land’s balance sheet has been strengthened through various asset disposals over the last few years. Additionally, the Group’s current projects especially its condominium projects appear to be selling well. MK Land arguably has the largest lankbank in Damansara Perdana, and we believe the land value of the Group’s c. 160 acres in Damansara Perdana alone is worth c.1.4bn, almost triple its current market capitalization.

To launch “The Spire” by 1HCY2015? Recently, the Group was reported to be mulling the launch of its high-end condominium near its existing project, Armanee Terrace. We understand that the said development will have 336 units, priced at RM700psf or a total of RM230m in GDV. The development is competitively priced, which is important to push the units. This will be the Group’s first new project in many years since One Damansara, which was launched back in 2009. This is a positive surprise contrary to our initial expectations of MK Land launching the mid-range condominium projects first in Damansara Damai (16 acres)., followed by the projects in Damansara Perdana (20 acres). Elsewhere, MK land still has c.200 units of semi-D units at Rafflesia (c.RM700m in GDV) for sale.

Non-core land for disposal. Despite taking longer than expected, we believe MK Land is still planning to dispose non-strategic assets and the next asset to be sold is the Setiawangsa land valued at c.RM96m. We understand that the sale is taking longer than expected because approvals for the land have lapsed and MK Land wants to sell the land outright without securing new approvals.

Maintain Outperform and TP of RM0.80 or 50% discount of our RNAV estimate. The next catalyst in our view will come from launching more projects, especially at their crown jewel, D amansara Perdana to maximize returns from the Group’s prime landbank. Balance sheet is also strong, with net cash of c.RM87m now.

Source: PublicInvest Research - 15 Dec 2014