• Profile. L&G’s core bus iness activities can be categorised into two divisions, namely Property and Education. The Property Division remains the primary growth driver and profit contributor of the Group while the Education Division (i.e Sekolah Sri Bestari and Tadika Manjaria Sekolah Sri Bestari and Tadika Manjaria) provides a stable and recurrent revenue stream. The Group also invests in other businesses including oil palm cultivation and clubhouse management.
• RM2bn sustained income stream. In its 2014 Annual Report, Managment guided that L&G’s exis ting and future projects are expected to contribute positively to its financial performance on a sustained basis over the next few years. The Elements@Ampang has been handed over to home owners in June 2014 while Damansara Foresta (Phase 1) is expected to hand over vacant possession in year 2015. These completions will likely be reflected in the FYE Mar 2015 and FYE Mar 2016.
• In addition, future projects including Tuanku Jaafar Resort Homes, Damansara Foresta (Phase 2) and the new residential serviced apartments adjacent to The Elements@Ampang are scheduled to be launched in 2015. These projects, with the collective GDV of RM2bn, will be captured in L&G financial results annually from 2016 until 2020. Looking much further out, it has about 2,500 acres in Lembah Beringin, north of Bukit Beruntung and Rawang.
• Netcash per share of RM0.33 is about 63% of current share price. L&G has a solid cash-rich balance sheet. As at 9MFY2015, net cash stood at RM355m, equivalent to 33sen per share or 63% of its current share price of 52sen.
• Poised to retest RM0.55-0.59 zones after downtrend line breakout. After nearly two months of s ideways cons olidation, L&G’a s hare prices s oared 4% yes terday to RM0.52 with 6.36m shares transacted, 334% higher against 3M average of 1.9m shares and 119% higher than 6M average of 2.9m shares, respectively. It also staged a major breakout above 10-d/20-d/30-d/50-d/100-d SMAs and downtrend line.
• The bullish breakout with robust volume coupled with bottoming out oscillators (i.e. RSI, MACD and Slow Stochastics) could spur price higher to 1st key resistance at RM0.55, followed by 200-d SMA at RM0.56 before reaching our LT target price of RM0.59 (LT objective).
• Supports are pegged at RM0.50 and RM0.49. Cut loss at RM0.48

Source: Hong Leong Investment Bank Research - 10 Apr 2015