Kulim - Sells parking business for RM13.5mil BUY

Date: 
2012-05-10
Firm: 
AMMB
Stock: 
KULIM
Price Target: 
5.00
Price Call: 
BUY
Last Price: 
0.00
Upside/Downside: 
+5.00 (∞%)

- Kulim Bhd's subsidiary, Sindora Bhd, has proposed to dispose of its parking business to Damansara Realty Bhd for RM13.5mil. 

- Damansara Realty shares the same holding company as Kulim Bhd, i.e. Johor Corporation.

- The parking business is undertaken by Metro Parking (M) Sdn Bhd and is classified under Kulim's 'Intrapreneur Ventures' division. 

- We view the disposal of the parking business positively as it appears that Kulim is gradually disposing of its non-plantation assets.   

- Apart from Metro Parking, the other business activity in the 'Intrapreneur Ventures' division is the shipping operations, which generate the bulk of the division's profits. 

- The 'Intrapreneur Ventures' division recorded an EBIT of RM37.5mil and revenue of RM169.9mil in FY11. 

- Based on the parking business' net profit of RM1.1mil for FY11, the selling price of RM13.5mil would translate into a PE of 12.3x. We believe this to be fair.

- Kulim would record a gain on disposal of RM11mil. 

- The disposal of the parking business also includes a profit guarantee to the buyer. Metro Parking has to achieve a net profit of not less than RM2.5mil for FY12F. 

- If the actual net profit is less than RM2.5mil, then Sindora would have to pay Damansara Realty 75% of the shortfall amount.

- We maintain a BUY on Kulim for a potential increase in dividends to be paid from the capital repayment proceeds of the disposal of QSR Brands and KFC Holdings. Additionally, Kulim would be a purer plantation company. 

Source: AmeSecurities 
Discussions
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chrisyba

Kulim stands to pocket approximately RM2.8B cash from QSR & KFC sales...potential special dividend to reward shareholders. Could be as much as RM1 per share or more same like in last year. Another catalyst is re-rating for being a pure plantation counter. Good stock to accumulate on price weakness.

2012-05-18 20:11

sushi

hi chrisyba....you hardly make buy calls but when you do, your call is unbelieveable accurate, Kulim flies today...you have done it again. Really hope you can be more active on forum because I have benefitted so much from you. Thanks again! XOXO

2012-05-21 09:14

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