MK Land's fall from grace was due to years of earnings disappointments and bad press from poor workmanships, LAD issues and frequent change of management. In the heydays, MK Land's market capitalization was higher than RM4bn before it collapsed to current sub-RM400m level. However, MK Land, in our view deserves to be back on investors' radar again with its huge landbank in Damansara Perdana, earnings improvements, and stronger balance sheet post the 3-year turnaround stage announced in 2008.

• MK Land's main landbank include 170 acres of undeveloped net land in Damansara Perdana and 55acres in Setiawangsa, Kuala Lumpur. On our estimates, these plots of land alone should be worth at least RM1.6bn as compared to its market cap of RM360m.
• Main launches target for CY2012 are new phases of its maiden landed properties, Semi-Ds in Rafflesia, which has a total 454 units or combined GDV of RM1bn (ASP RM600psf, 160 units sold so far), 2 remaining condominium blocks in Metropolitan Sq with RM200m GDV (ASP RM500psf, 444 units) and clearing the remaining inventories in Armanee Terrrace (ASP RM385psf,100units). Unbilled sales are c.RM500m.
• We value MK Land at RM0.80, c.50% of its RNAV estimate of RM1.56. The stock is currently trading at a steep discount even to its book value (c.61%), suggesting investors are still skeptical. We believe MK Land, the largest landowner near TTDI-LDP interchange could see its land prices increase further with the completion of more commercial projects, especially by the Empire Mammoth Group which has spent more than RM600m on land acquisition alone in Damansara Perdana.

Source: PublicInvest Research Research - 2 April 2012
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