Symlife was brought to my attention by an article written few days ago by one of our fellow blogger.

I have done a study and concurred with his view that the stock does look interesting and worth paying attention.

1. Background Info on Symlife

Symlife is a property development company listed on Bursa and was previously known as Bolton Berhad.

Based on 310 mil shares outstanding and latest closing price of RM1.16, it has market cap of RM360 mil.

The group reported aggregate net profit of RM50.3 mil over the past four quarters, this translates into historical PER of 7.1 times.

As at 31 December 2013, the group has net assets of RM544 mil, interest bearing debts of RM295 mil and cash of RM132 mil.

To be conservative, let's assume that all the cash will be used to fund the group's future landbanking and / or property development activitues. As such, the gearing is 0.54 times.

However, out of the RM295 mil debts, RM130 mil is due in 5 years time (Islamic Medium Term Notes). As such, over the next few years, the group only needs to service principal repayment of RM165 mil, or average of RM33 mil per annum. 

This amount is relatively small if compared to the group's net assets of RM544 mil and revenue of more than RM400 mil in the latest financial period.

In other words, the group has a relatively healthy balance sheet and shouldn't have problems servicing its financial obligations.

2. Landbanks

According to the company's annual report for the financial year ended 31 March 2013, the group's land bank are as set out below :-

As shown in the table above, the group has more than 900 acres of land bank at strategic locations (mostly Klang Valley and Penang) with net book value of RM458 mil.

One of the most interesting piece is the 419 acres located at Sungai Long near Kajang, which has GDV of RM6 billion and could last the group for 10 years. 

Many of these land bank were acquired / revalued many years ago. As such, the actual valuation should be substantially higher.

3. Development Projects

The group launched RM688 mil properties in FYE 31 March 2013 :

For the FYE 31 March 2014, the group targets to launch the following development projects :-

(The Wharf Residence, Taman Tasik Prima, Puchong)

(Summerhomes, Taman Tasik Prima, Puchong)

(Flexisuites, Taman Tasik Prima, Puchong)

(Tijani Ukay, Ulu Klang)

The group is also in joint ventures with various parties to undertake development projects in KL, Kelantan and Sabah.

Altogether, future GDV is approximately RM3 billion, approximately 7 times 2013's revenue of more than RM400 mil.

It is estimated that unbilled sale as at December 2013 is apprxoimately RM600 mil.

4. Share Price Has Yet to Reflect Improvement in Fundamentals

Due to its low profile and lack of coverage by analysts, despite reporting consistent net profit of more than RM10 mil per quarter over the past twelve months, the company's share price traded within a tight band of RM1.00 and RM1.20.

5. Warrants

The company has 107 mil of 7-years Warrants outstanding (Symlife-WB).

Exercise price of RM1.10, expiring in November 2020.

Based on latest closing price of 44 sen and mother share price of RM1.16, conversion premium is approximately 33%. 

6. Concluding Remarks

(a) Symlife is trading at substantial discount to net assets. Based on its net assets per share of RM1.93, PBR is 0.60 times only.

The net assets per share of RM1.93 has not factored in hundreds of million Ringgit of potential revaluation surplus.

In my opinion, revaluation surplus is more than just paper gain. Landbank that has not been revalued would automatically lead to fat profit margin when the properties are launched and developed. 

This augurs well for the group's profitability going forward.

(b) The group has healthy balance sheet. The bulk of its debts are due in five years time. The group would have ample financial flexibility for expansion and to cope with any contingencies.

(c) The group's huge 419 acres of development land at Sungai Long is one of its key attraction. Bandar Sungai Long, located in Kajang, used to be considered a remote area. But with the completion of various highways, it is now only approximately 40 minutes travelling distance from KL.  As such, in recent years, the area has attracted attention from housebuyers and property investors.

The group has settled the conversion premium and extension of lease for the land. It is estimated that the Sungai Long project will have GDV of RM6 billion and will take easily 10 years to complete.

(d) The stock is now trading at undemanding historical PE multiples of 7 times. This is expected to drop further as future development profit are gradually booked in.

Due to its low profile, the stock is relatively unknown to investors. However, it would be a matter of time before it starts gaining recognition, just like Gadang and GOB.

Symlife is interesting because it has small market cap and yet sits on huge tracts of land bank. Most of which are not revalued and reflecting market pricing at 1990s and early 2000s. The group used to be mired in debts. But with new owner and management, the group is finally turning around and heading towards the right direction. 

An interesting small cap stock packed with potentials.