Initiate with BUY and Target Price of RM2.70 Target Price: RM 2.70

We are initiating coverage on Plenitude Bhd (Plenitude) with a BUY recommendation and target price of RM2.70 based on peers’ average P/B ratio of 0.66x of our estimate FY18E NTA. Deep value has emerged in Plenitude after its shares declined almost 50% from its all-time high of RM2.86 in Aug 2014 amid weak sentiments and challenging outlook in property sector.

Established property developer with ample land bank of 1,351 acres

Plenitude is an established property developer with 1,351 acres of undeveloped land bank dispersed throughout Peninsular Malaysia, namely Johor, Selangor, Kedah and Pulau Penang.

Property Market outlook remain challenging, Plenitude timing adopted prudent strategy

Overall market remains challenging with oversupply in office, retail and highend condominium segments. Demand for residential properties with the affordable pricing and good location however remains steady to strong.

Recurring income from hotel operation

Started with a beach hotel in 2001, the Group’s hotel operation now consist of five hotels and a serviced residence. The hotel operation has become a major income stream for the Group.

Strong Balance Sheet, Net Cash RM0.91 per share, consistent dividend

Plenitude has a strong balance sheet with a net cash of RM348.9m or RM0.91 per share. It hence can gear up for expansion when opportunities arise and reward shareholders with dividends, consistently paid since listing in 2003.

Source: Mercury Research - 4 Jul 2018