• Company profile. Malton Berhad is involved in few business segments, where the property development and construction commanded 70% and 26% respectively in FY17. Current flagship project is the Bukit Jalil City (collaboration between Malton and Pavilion Group), developing signature shops, a regional mall (Pavilion Bukit Jalil) and high-rise residential properties with healthy take-up rates of 90%.
• Healthy recovery in FY17. Malton’s FY17 revenue rose by 38% yoy, while PBT grew 57% yoy on the back of higher recognition revenue upon completion of sale of remaining units of Bukit Jalil City Signature Shops and initial recognition of revenue of Tower 1 of the Park 2 Residence in Bukit Jalil with encouraging take up rates.
• Undemanding valuations compared to its peers. Currently, Malton is trading at price to book ratio of 0.75x vs. the peers’ average of 1.0x. We opine that Malton could be a laggard in its property space.
• Potential M&A angle on the cards. Since Tan Sri Desmond Lim became the major shareholder of WCT, business rationalization between Malton and Pavilion REIT has been the talk of the town. Hence, investors are likely to look for M&A news to trade on Malton, given the strong asset and landbank portfolio.
• Poised for a sideways consolidation breakout. Malton has been retesting the RM1.24 level with improved volumes after hovering between the RM1.15-1.28 over the past 6 weeks. With the MACD Indicator suggesting a “buy” signal, we believe it could poise for a breakout above the RM1.24, targeting RM1.35-1.38 with a LT target of RM1.45. Support will be located around RM1.15-1.19, with a cut loss of RM1.13.

Source: Hong Leong Investment Bank Research - 31 Oct 2017