OSK et al Fight Back

Yesterday OSKH's share price closed at RM2.05, which is almost the same level compared to mid-Oct last year when it first announced the proposal to acquire shares of OSKProp & PJDev.

Now the proposal has been approved by Security Commission.

Compared to 7 months ago, there are changes in the total paid-up shares of OSKProp & PJDev due to warrant conversion, as well as their earning records.

So I will do a rough calculation again on the "fair value" of OSKH using the old boring PE method.

Currently OSKH has 950.96mil issued & paid-up shares.

Its major shareholders (OLH & others) will definitely acquire:

• 177.64mil shares (~73.0%) of OSKProp shares by issuing 177.64mil new OSKH shares
• 143.36mil shares (~31.7%) of PJDev shares by issuing 114.69mil new OSKH shares

So, after the acquisition by major shareholders, total OSKH shares will increase to 1,243mil.

OSKH offers to acquire the remaining shares in both OSKProp & PJDev from minority shareholders, by either share exchange or cash. I assume that no more OSKP & PJDev warrants will be converted to respective mother shares after this.

OSKH will:

• Offer to acquire ~71mil OSKProp shares for RM1.95/share or exchange 1 OSKProp share for 1 OSKH share.
• Offer to acquire ~315mil PJDev shares for RM1.56/share or exchange 5 PJDev share for 4 OSKH shares

If all minority shareholders of OSKProp & PJDev take the offer and choose OSKH shares over cash, then OSKH total shares will increase to 1,243 + 71 + 252 = 1,566mil shares.

Besides, there will be another 237.7mil new OSKH warrants (4:1) for existing OSKH shareholders.

Without including the future dilution from warrant, OSKH's paid-up shares might increase by 65% after the corporate exercise.

       Paragon (OSKP)

After OSKProp and PJDev are included into OSKH, OSKH will be a prominent property developer in the country.

Base on current earning trend, for calendar year 2015, OSKH, OSKProp & PJDev might be able to produce a guesstimated PATAMI of RM200mil, RM120mil & RM120mil respectively, with a total of RM440mil.

Thus, if all current OSKProp & PJDev shares are converted to OSKH's shares, guesstimated EPS for the enlarged OSKH will be 28sen (440/1566). 

If we give OSKH a more conservative PE ratio of 8x, target price will be RM2.24. If PE is 10x, target price will be RM2.80.

This does not include the 15sen special cash dividend for OSKH existing shareholders. If it is included, then target price can be adjusted to between RM2.39 - RM2.95.

Again, this is still yet to include 1 "free warrant" for every 4 OSKH shares. Though warrant detail is not fixed yet, I think its exercise price is likely RM2 or slightly more than that. So there will probably be a 24sen to 80sen "profit" for each OSKH warrant held.

What if not all OSKProp & PJDev shareholders want to convert their shares to OSKH shares? In this case, both total OSKH shares and guesstimated future earning will decrease. It is hard to predict but overall EPS might not differ too much from 28sen calculated earlier.

If ALL OSKProp & PJDev shareholders do not want to convert their shares to new OSKH shares, guesstimated 2015 EPS for OSKH will decrease to 26sen.

If 50% of OSKProp & PJDev shareholders opt for OSKH shares exchange, then guesstimated 2015 EPS for OSKH will be about 27sen.

Nevertheless, the 237.7mil new OSKH warrant-C will cause a dilution of at least 15% in the future.

*All the figures here are not accurate as they are guesstimated.

       Windmill Upon Hills (PJD)

Without a shadow of a doubt, OSKH will turn into a major property developer with market cap of more than RM3bil which is 2 times higher than Tropicana's RM1.5bil now, though its RHB bank shares will still contribute about half of its net profit.

At current share price of RM2.19, OSKH looks fairly attractive especially with the 15sen special cash dividend and free warrants. Without these "sweets", the overall deal will not be that exciting for most OSKH shareholders I guess.

Anyway, as property sector and banking sector are expected to slow down, will it affect OSK's valuation and earning in the near future?

OSK: A Lopsided Proposal?

OSKProp & PJDev are two excellent mid-size property development companies.

If both of them combine to form a large cap property developer, that will be good.

If both of them combine and are also given a considerable amount of shares in the country's largest bank, then it will be even better.

As we know earlier, Tan Sri Ong Leong Huat and his related parties are major shareholders in OSK Holdings (OSKH), OSK Property & PJD.

Previously Ong LH has hinted that OSKH which has sold its core business to RHB, will choose property development as its new core business. 

So people are guessing whether OSKP or PJD will be injected into OSKH. In the end, it is both of them.

History has suggested many times that Ong LH is not generous enough in offering takeovers.

This is one of the reason why I chose Huayang over OSKProp to invest in.

Sometimes learning from history is important...

I am not an expert in the field of business. I just picked and chose part of the announcement and try to understand it. I might misunderstand the proposal and give wrong opinion.

OSKH has agreed to acquire all of Ong LH & related parties' shares in OSKP (73.6%) and PJD (31.7%) for RM2.00 and RM1.60 per share respectively.

OSKH will offer to acquire the remaining shares of OSKP & PJD from other smaller shareholders at similar price offered to Ong LH.

All OSKP and PJD's shareholders must be very upset with this proposal I guess.

Just before this announcement, OSKP closed at RM2.27 while PJD closed at RM1.67. However, just 2 months ago, OSKP and PJD were traded at RM2.85 & RM2.25 respectively.

OSKP shareholders can choose to get cash at RM2.00 per share or get one OSKH share per OSKP share.

PJD shareholders can choose to get cash at RM1.60 per share or get 0.8 OSKH share per PJD share.

OSKP warrant holders are offered RM1 per warrant, while PJD warrant holders are offered 60sen per warrant.

However, both warrants holders can convert the warrants to mother shares if they want to.

Meanwhile, current OSKH shareholders will get one free warrant for 4 OSKH's shares, and a special dividend of 15sen per share.

This seems bad for current OSKP & PJD shareholders, especially those holding their warrants.

For OSKH shareholders, it is good news as it will acquire 2 good companies at a significant discount price, besides getting free warrants and special dividend.

Nevertheless, OSKH is valued at only RM2.00 in this deal. OSKH's share price reached RM2.55 in Aug and closed at RM2.08 yesterday.

So if you have 1,000 OSKP's shares, you can convert them into 1,000 OSKH's shares valued at RM2.00. If OSKH at RM2.00 is undervalued, then it's not too bad for OSKP & PJD's shareholders I guess.

The question is, what is the fair value of OSKH after the proposal goes through?

According to OSKH's announcement, the enlarged numbers of paid-up shares may increase to 2,067.5 million in maximum scenario if all OSKP & PJD warrants are exercised, and all OSKP & PJD's shareholders choose to take up OSKH shares, and all new free OSKH warrants are exercised.

Anyway, not all OSKP & PJD warrants will be exercised, though it seems attractive to do so if OSKH is trading at far above RM2.00.

Similarly, not every OSKP & PJD shareholders will want to get OSKH's shares instead of cash.

Excluding the new warrants, I assume the total shares of the newly born OSKH to be 1,700 million as an average.

I roughly guesstimate OSKH, OSKP & PJD profit after non-controlling interest to be RM200mil, RM100mil & RM80mil respectively for current financial year. This will make up a total of RM380mil. 

So the non-diluted guesstimated EPS of OSKH will be 22.3sen, with a PE ratio of roughly 9.0x at share price of RM2.00.

This is only my rough estimate base on PE method. I don't include the positives to OSKH from the recent proposed merger between RHB, MBSB and CIMB as I don't follow its news closely. It seems like this deal benefits RHB and OSKH thus OSKH might be valued higher.

It looks like OSKH at RM2.00+ is a good investment to make, unless one is very pessimistic of property sector in the near future. 

Anyway, PJD's minor shareholders might not accept this proposal, but its major shareholders might start to accumulate its shares from open market.

This proposal is expected to be completed by the third quarter of 2015. So does this mean that we will probably see OSKP & PJD traded at RM2.00 & RM1.60 respectively for about a year?

If OSKH's share price go far above RM2.00, for example RM2.30, this means if you buy one OSKP's share at RM2.00, you can get one OSKH's share worth RM2.30.

Will OSKH's share price advance far from RM2.00 in the next one year?

Head-To-Head: OSKProp vs Huayang

In contrary to some analysts who do not expect a good year for property sector this year, property sector actually does quite well in term of sales and stock price performance.

Since the beginning of this year I have removed those property stocks from my watchlist. Now I know that it is a mistake. The consolation is, property stocks still take up quite a big percentage in my portfolio.

One of the stock I missed dearly is Huayang. 

I think not many investors will deny that Huayang is a great stock to own for long term. I am "craving" for it for quite some time but I don't know why I didn't buy it. 

Perhaps when the stock price keeps on breaking new high, it kind of stops you from buying.

I was very tempted to buy its shares when it dropped to below RM2 early this year. However at that time, I think I have to be disciplined enough not to add more property stocks. Furthermore, its high gearing also further strengthen my decision not to buy.

Now I can only regret my stupid decision.

At the same time, OSKProp started to catch my attention after it released its full FY2013 result. Nevertheless, I'm not sure why I did not have any urge to study it further, perhaps because it is also a property stock.

Now OSKProp has already released its financial result for the first half of 2014, and it is just too hard to ignore it.

Both Huayang and OSKProp are small-mid size property developers that are growing at the moment. This can be seen from their latest financial results.

As OSKProp financial year ends on 31 Dec and Huayang on 31 Mac, for easier comparison I will consider Huayang's FY14 to be 2013 and similarly for earlier financial years.

Throughout the last 5 years, in general both Huayang & OSKProp achieve consistent growth in revenue and PATAMI.

However, Huayang's revenue and PATAMI are higher compared to OSKProp, especially its PATAMI.

The PBT margin of both companies are almost similar. So the relatively lower PATAMI for OSKProp might be due to more profit to minority interest (Sutera Damansara is 51% owned), while all recent Huayang's projects are 100%-owned.

Because of bonus issues in 3 consecutive years in 2011, 2012 & 2013, Huayang's EPS is declining slightly for the last 2 years despite increasing PATAMI. Meanwhile OSKProp's EPS is in a steady climb.

How about the future earnings of both companies? We can look into their recent sales figures as this will give some earning visibility for the near future.

OSKProp locked in more new sales compared to Huayang every year for the past 3 years. So, unbilled sales of OSKProp are higher as well.

In the last 3 years combined, OSKProp has generated total new sales of RM2.03bil compared to Huayang's RM1.65bil.

This means that OSKProp's revenue for year 2014 & 2015 will probably overtake Huayang. I predict that OSKProp's PATAMI may also surpass Huayang in 2014. These can be seen from the latest financial results by both companies.

Nonetheless, Huayang can still prevent this with more aggressive new launches in the second half of 2014.

For ROE, Huayang is excellent at above 20% mark, most probably in 2014 as well. However, do expect OSKProp to break above 20% in 2014.

High gearing is Huayang's main "problem" at the moment, due to aggressive landbanking activity since year 2011, especially the purchase of Puchong's land that cost RM158mil.

OSKProp looks like it can become a net cash company if it does not buy land this year.

Table below shows recent land acquisition of OSKProp & Huayang (might not be accurate)

Date	Location	Size (acres)	Cost (RM mil)	Project
OSKProp
Sep 2011	Cyberjaya	16	86.5	Pangaea
Feb 2012	Shah Alam	13.73	45.4	Gravitas
Sep 2012	Bandar Sri Damansara	1.06	12	Opus
May 2013	Shah Alam	2.91	15.2	Emira
Huayang
May 2011	Kuala Lumpur	1.55	32	Sentrio Suites
Jun 2011	Shah Alam	3.73	13	Metia Residence
Aug 2011	Johor Bahru	2.1	10.7	Citywoods
Apr 2012	Hulu Kinta	21	15.2
Oct 2012	Puchong	29.2	158
Jun 2013	Seri Kembangan	3.73	56.9
Aug 2014	Hulu Kinta	7.2	25.1

For the past 3 years, Huayang spends almost 2 times more than OSKProp for land acquisition. OSKProp needs more cash to construct its Atria shopping mall I guess.

In term of dividend, generally Huayang pays more dividend per share due to its superior earning.

However, OSKProp also pays good dividend historically if we look at its dividend payout ratio from net profit. Both OSKProp and Huayang are quite even in dividend payout for the past 3 years at around 40%.

At current share price, Huayang has a decent dividend yield of 5.0% (RM2.42), while OSKProp's dividend yield is at 3.1% (RM2.78).

       Metia Residence (Huayang)

As mentioned earlier, base on last 3 years' sales figures, OSKProp might overtake Huayang in term of revenue and profit. However, this will also depend on their respective sales this year and in the future.

Who has a brighter future?

As Huayang has acquired more new lands, it is not a surprise that it plans to launch lots of projects (up to RM1.09bil) for its FY15 which ends in Mac 2015. So far this year it still hasn't officially launch any projects.

The table below shows recent and future new projects launch of OSKProp & Huayang. (might not be accurate)

Year	OSKP		Huayang
	Project	GDV	Project	GDV
2011	Mirage By The Lake	466	Parc (OneSouth)	154
	Mirage Residence	175	Gardenz (OneSouth)	160
	Atria SOFO	200
2012	Vale (Sutera)		Flexis (OneSouth)	183
	Paragon (Pangaea)		Pulai Hijauan
	Solstice (Pangaea)	340
2013	Eclipse (Pangaea)	398	Greenz (OneSouth)	194
	Almira28 (Sutera)		Metia Residence	156
	Vale II (Sutera)		Sentrio Suites	213
2014	Roseville (BPJ)
	Gravitas	150
TBA	Emira	250	Citywoods	248
	Opus	75	The Gardens	64
	Kepler (Pangaea)	338	Cube (OneSouth)	185
			New phase P/Hijauan	127
			First phase Puchong	300
			Ridgewood	90
			Greenview Residence	12

TBA = To Be Annouced
BPJ = Bandar Puteri Jaya

It is clear that Huayang depends a lot on its successful One South project in Seri Kembangan, while the near future earning of OSKProp will be hugely supported by its high-GDV Pangaea in Cyberjaya. Both projects will probably enter their last phase this year.

After this, Huayang has Puchong West (GDV RM1.35bil) as One South's successor. However, it seems like OSKProp doesn't have a successor yet for its Pangaea.

       Pangaea (OSKP)

OSKProp has small pieces of prime land in Bandar Sri Damansara (Opus) & Shah Alam (Emira), while Huayang matches it with land at Seri Kembangan (Mines South) & Johor Bahru (Citywoods).

Both companies have huge township development. OSKProp has Bandar Puteri Jaya in Sg Petani, with remaining landbank at approximately 1,200 acres. Huayang has ongoing township at Bandar University Seri Iskandar in Perak (about 400 acres remaining) and Taman Pulai Hijauan in Johor (about 92 acres remaining).

Coincidentally, both companies also have lands in Seremban, where OSKProp has 15 acres while Huayang has 35 acres, both freehold.

Besides, Huayang has an ongoing commercial project Senawang Link in Seremban which has 20 acres remaining, as well as more small land parcels in Ipoh for both commercial & residential development. (from latest annual report).

       Cube @ One South (Huayang)

Nevertheless, OSKProp recently sold 108 acres of land in its BPJ for RM56mil to PR1MA, and will be given the responsibility to construct 1,395 units affordable houses on it.

Protasco gets similar project worth RM88.1mil earlier this year to construct 1,144 units of PR1MA houses. So I think OSKProp's PR1MA project might worth about RM110mil.

OSKProp expects its Atria Mall (470,000 NLA) at Damansara Jaya to be ready by the end of this year. So it should contribute as a recurring rental income to OSKProp from year 2015, which can more or less "protect" the company from property market slowdown.

Furthermore, OSKProp plans to build the largest shopping mall in Sg Petani in its BPJ which might mean more recurring income in the future.

Belleview Group (not listed) also said that it will build the largest shopping mall in Sg Petani. Who will be larger then?

       Atria SOFO & Shopping Complex (OSKP)

Meanwhile for Huayang, its landbanking activity might be limited due to high gearing, even though it has recently taken up a RM250mil Sukuk program. It has to pray that its property projects sell well to generate enough cash to pay the debts.

Anyway, Huayang does not seem to stop here as the management eyes further land acquisition in mainland Penang and Kota Kinabalu.

Development lands are crucial to a property company so I think Huayang's move is good for its shareholders. 

       Sentrio Suites (Huayang)

Both companies seem to be undervalued at the moment base on fair PE ratio of 10x.

	OSKProp	Huayang
Current Share Price (RM)	2.78	2.42
Projected PATAMI (mil)	100	100
Projected EPS (sen)	41	38
Actual PE	12.2	7.8
Projected PE	6.8	6.4
Diluted Projected PE	9.6	6.4

OSKProp's current actual PE (base on latest full FY result) may be higher but it will drop for sure if its 1HFY14 PATAMI is to be annualized. 

The projected PE is base on projected PATAMI of RM100mil for both companies in their next full FY (similar with Tambun!). 

At the moment OSKProp and Huayang have paid-up shares of 244mil & 264mil units respectively. OSKProp has 105mil outstanding warrants expires in Aug/2017. 

       Mirage By The Lake (OSKP)

In term of management team, Huayang has a good one for sure, who has grown the company tremendously besides giving good dividends and bonus issues without diluting shareholder's shares value.

As for OSKProp, I'm not too sure but it can't be too bad as it has successfully raised the company's earning and value to a higher level.

Anyway there is a possibility that OSKProp might be injected into OSK Holdings by its major shareholders. I think this might be a double-edge sword to OSKProp's minor shareholders. If OSKProp is valued cheaply, then it's not good.

In May 2011, OSKProp was attempted to be taken over by major shareholder Ong Leong Huat at 87sen per share. Its share price was traded around 75sen at that time and surged to 79.5sen a day before the announcement.

OSKProp's FY2010's EPS stood at 6.3sen, so 87sen offer price represented a PE ratio of 13.8x. However, its net asset per share at that time was RM1.74. 

As a result, the takeover offer didn't go through.

In 2013, Ong also attempted to take over both OSK & OSKVI with offer price significantly lower than their net asset per share. So both have failed as well.

OSKProp's latest net asset per share stands at RM1.87, which is below its share price of RM2.78 at the moment. However, it still has Atria mall & is yet to revalue its land. What should be OSKProp's fair price? 

Anyway, OSKProp might not be injected into OSK in the first place.

Is it still safe to invest in property sector now? If it is, OSKProp & Huayang, which one is more attractive? Why not both?

OSK's Deal Coming?

Since selling its core business OSK Investment Bank to RHB Capital in 2012 for RM1.95 billion, OSK Holdings (OSK) does not have a core business.

In return, OSK was paid RM147.5mil cash and 245mil RHB shares at RM7.36 per share. After dividend reinvestment, now OSK holds 9.91% of RHB (252.3mil shares).

Currently OSK involves in property investment and capital financing business which generate little revenue and profit compared to what its investment bank has contributed before. Sooner or later it will inject a new core business into it.

The new business can't be finance-related that compete with RHB within 6 years. However, It is not hard to guess what kind of business OSK will acquire soon.

OSK's controlling major shareholder, CEO & MD Tan Sri Ong Leong Huat (40.5%) is also a major shareholder in other listed companies such as OSK Property (73.8%) and PJDev (21.4%).

Ong LH has hinted that property development will be OSK's new core business back in April 2014. The news will be announced within 6 months from April.

All the discussion written below are just my inexperience and laughable opinion, which might be inaccurate and not true.

Anyway, I think I will learn something from OSK's corporate exercise.

Will OSK Holdings purchase development land by itself and compete with OSKProp and PJDev in the property market? I don't think so.

So there is straightforward speculation that OSKProp and/or PJDev will be consolidated into OSK Holding.

The question is both or one of them.

If OSK acquires both companies then Ong LH may risk diluting his shareholding in OSK as OSK may need to issue new OSK shares to acquire those companies.

So I think OSK may acquire one of them which should be OSKProp as they have the same name and Ong LH holds 73.8% of it directly & indirectly.

The deal seems to be close as OSK's share price surged in the last 2 trading days while both OSKProp & PJDev's share prices are at new high.

All 3 companies owned by Ong LH above are still trading at a relatively low PE ratio even though their share prices have gained handsomely this year.

	OSKProp	PJDev	OSK
Price@27/6/14 (RM)	1.98	1.66	1.83
Shares (mil)	243.7	456.1	969.1
PATAMI (RM mil)	*55.5	#97.0	*195.6
EPS (sen)	0.228	0.213	0.202
PER	8.68	7.79	9.06
OLH %	73.8	21.40	40.54
Equity (mil)	434.7	999.0	2628.0
Cash (mil)	124.5	110.6	1.9
Loans (mil)	162.2	467	240.6
Net D/E	0.09	0.36	0.09

* PATAMI for FY13

# PATAMI for Last 4 Quaters

Currently PJDev has slightly lower PE ratio compared to OSKProp but PJDev has significantly higher gearing.

Both have warrants which will dilute their future EPS. Once fully converted to mother shares, OSKProp's (Year 2017) EPS will be diluted by 30.7% while PJDev (Year 2020) will be diluted by 31.7%.

If OSK is really going to acquire OSKProp and make it its core business, I guess it should be a good news to shareholders of both companies.

Should speculators & investors buy OSK Holdings, OSK Property or PJDev now?

I have no experience in the rational of such business transaction so my opinion might be wrong.

Firstly, how to value OSKProp as an acquisition or merger target?

If we use book value or net asset per share, OSKProp's latest figure is RM1.81 at end of Mac14. Current share price of RM1.98 is 1.09x higher.

OSKProp has RM938mil of unbilled sales in Mac14 and its future development in Sg Petani alone carries a potential GDV of RM3bil. It has approximately 1,540 acres of land for development, with 1,500 acres in Sg Petani (Annual Report 2013). How many times book value is fair to acquire OSKProp?

OSK Investment Bank was sold to RHB at 1.77x book value about 2 years ago.

Can enterprise value being used here?

EV of OSKProp = 1.98(243.7) + 17.5 + 162.2 - 124.5 = RM537.7 mil or RM2.21 per share. It is still 11.6% below current share price.

	OSKProp	PJDev
EV	537.7	1097.5
EBITDA	86.6	146.0
EV/EBITDA	6.2	7.5
EV/share	2.21	2.41

OSK will need to pay more about RM1bil to take over PJDev from EV point of view.

OSKProp has slightly lower EV Multiple (EV/EBITDA) compared to PJDev, which means OSKProp is more attractive for a take-over as it takes only 6.2 years to pay off the cost compared to PJDev's 7.5 years.

As OSK is low in cash (only RM1.9mil), it must borrow to fund the acquisition unless it divests its investment in RHB which is unlikely at the moment.

OSK should have no problem to borrow as its investment in RHB is worth RM2.1bil and net debt to equity ratio is merely 0.09x currently.

If it borrows the entire EV of RM537.7mil of OSKProp from financial institution to fund the acquisition, its net gearing will only increase to 0.30x which should be fairly comfortable for a property developer.

This does not include the 101.6 million OSKProp-WC warrants though.

So if it does not issue new OSK shares for the acquisition, then I think it is good news to current OSK shareholders as not only net profit will rise tremendously, there will be no dilution of shareholding.

Nonetheless, I'm not sure how many percent of OSKProp that OSK will acquire should it happen. Will it acquire 100% and delist OSKProp? Ong LH has already owned 73.8% in OSKProp & 76.5% in OSKProp-WC.

Will it issue new OSK shares to existing OSKProp shareholders as part of the deal?

Is it possible that Ong LH who currently enjoys 73.8% profit sharing in OSKProp would want to reduce it to only 40.5% after consolidating into OSK without issuing additional OSK shares to OSKProp shareholders?

Will OSK acquire PJDev instead of OSKProp, or both, or neither of them?

I think it is very likely that the share price of those involved in the deal with increase, unless the deal tabled is unfair or does not meet the expectation of small shareholders.

How is Ong LH's reputation?

Last year Ong LH has attempted 2 take-overs of his companies which failed eventually.

• July13 - offered RM1.68 for OSK, share price at that time RM1.65, net asset per share RM2.58.

• Dec13 - offered RM0.58 for OSKVI, share price at that time RM0.52, net asset per share RM1.06.

Those offers were not good.

Anyway, I think OSK Holdings might be a good stock to hold in anticipation of new business injection.

* This article is just for sharing. Readers should not take it seriously :)

Top 10 In Property Sector

During the property bull run for the last 5 years, a lot of listed developers' profit grow. Thus, their share price also rise. However, does the rise in share price proportionate with the rise in profit?

After screening through the listed property stocks, actually we can find that some small/mid cap companies are still quite "undervalued" at the moment.

The tables below contain some easy-to-get info of most companies listed in property sector of Bursa KLCI. Some of them are not pure property developers. Some other property developers listed in other sectors and those with annual net profit less than RM15mil will not be included in this list. There is no guarantee that the numbers provided here will be 100% accurate.

The "remark" in the table roughly shows the most recent financial result compared to previous results.

Developers with market cap > RM1 billion

	Stock	Cap (mil)	Price	EPS	PE	Div (sen)	DY%	NTA	Remark
	E&O	2,270	2.00	11.7	17.5	4.5	2.3	1.28	1H13 down
	IGB	3,949	2.65	12.5	21.9	7.5	2.8	2.77	1H13 flat
	IJMLand	4,287	2.75	15.3	19.9	5.0	1.8	1.85	1Q14 up up
	Mahsing	3,372	2.43	27.6	14.6	7.6	3.0	1.50	1H13 up
	SPSetia	7,942	3.23	20.5	20.2	14.0	4.3	2.22	3Q13 up
	Sunway	5,015	2.91	41.2	9.4	6.0	2.1	2.90	1H13 up
	SPB	1,474	4.29	20.1	21.3	10.0	2.3	5.56	3Q13 up
	TAGB	1,439	0.29	1.7	15.6	0.6	2.1	0.47	1H14 up
	Trop	1,678	1.52	32.1	9.9	6.4	4.2	2.45	1H13 up
	UEMS	10,656	2.45	10.4	23.8	3.0	1.2	1.28	1H13 up up
	UOADev	3,202	2.39	24.6	10.6	12.0	5.0	1.80	1H13 up

Developers with market cap RM300 million - RM1 billion

	Stock	Cap (mil)	Price	EPS	PE	Div (sen)	DY%	NTA	Remark
	A&M	336	0.92	7.4	12.4	x	x	1.44	1H13 flat
	Amprop	456	0.785	16.9	4.7	3.0	3.8	1.30	1Q14 down
	Asas	330	1.72	14.3	12.1	5.0	3.0	2.18	1H13 flat
	BJAsset	946	0.85	4.2	20.5	1.5	1.8	1.99	FY13 down
	Cresndo	736	3.23	29.1	13.2	12.0	3.7	3.02	1H14 up up
	Daiman	577	2.72	32.7	8.4	12.0	4.4	4.89	FY13 up up
	Glomac	852	1.17	14.7	8.4	6.5	5.5	1.16	1Q14 up
	Guoco	806	1.15	6.3	19.2	2.0	1.7	1.20	FY13 up up
	Huayang	615	2.33	36.6	8.7	13.25	5.7	1.75	1Q14 down
	Hunzpty	499	2.34	91.6	3.0	5.6	2.4	3.84	FY13 up
	IBHD	311	2.72	14.8	18.5	4.0	1.5	1.62	1H13 up
	KSL	831	2.13	34.1	6.3	x	x	3.16	1H13 up up
	LBS	844	1.80	9.9	22.4	2.5	1.4	1.26	1H13 up
	Magna	350	1.05	5.3	19.8	1.5	1.4	0.54	1H13 up
	Malton	353	0.85	8.5	10.0	2.5	3.0	1.46	FY13 down
	Matrix	860	2.86	34.5	8.3	15.4*	5.4*	1.73	1H13 up
	Medainc	344	0.725	6.2	12.3	2*	2.8*	0.46	1H13 up
	MKH	908	2.60	25.4	12.3	5.0	1.9	2.62	3Q13 up up
	MKLand	435	0.36	3.4	10.7	2.0	5.6	0.91	FY13 up up
	Naim	900	3.60	37.0	10.3	8.0	2.2	3.44	1H13 up
	OSKProp	322	1.32	15.3	10.2	7.5	5.7	1.59	1H13 flat
	Paramon	513	1.52	16.7	9.1	8.0	5.3	2.09	1H13 flat
	PJDev	493	1.08	13.4	8.1	5.0	4.6	2.12	FY13 up
	Plenitud	613	2.27	28.8	7.9	6.0	2.6	3.37	FY13 up
	SDRED	384	0.90	11.3	8.0	2.25	2.5	1.53	1Q14 down
	SHL	518	2.14	14.2	15.0	12.0	5.6	2.43	1Q14 up
	Symlife	335	1.08	32.7	3.9	3.0	2.8	1.94	1Q14 up
	TAHPS	419	5.60	19.6	28.5	20.0	3.6	5.99	1Q14 up up
	Tambun	486	1.44	14.9	11.9	9.1	6.3	0.76	1H13 up
	WingTM	831	2.55	42.1	6.3	10.0	3.9	3.22	FY13 up up
	YNHProp	775	1.82	12.1	15.6	3.5	1.9	2.03	1H13 flat
	YTLLand	827	0.98	3.0	32.8	x	x	1.18	FY13 flat

Developers with market cap < RM300 million

	Stock	Cap (mil)	Price	EPS	PE	Div (sen)	DY%	NTA	Remark
	Asiapac	137	0.14	1.8	7.8	x	x	0.35	1Q14 up
	BCB	138	0.67	8.2	8.4	x	x	1.75	FY13 up up
	CHHB	284	1.03	8.9	11.6	x	x	2.81	1H13 up up
	Cview	223	2.23	38.0	5.9	14.0*	6.3*	2.01	1H13 up up
	Eupe	95	0.745	11.6	6.4	2.0*	2.7*	2.06	1Q14 down
	Gromutual	163	0.435	5.9	7.3	1.5	3.4	0.74	2Q14 up
	GOB	182	0.80	13.4	6.0	x	x	1.12	1Q14 flat
	Ivory	261	0.585	8.8	8.1	x	x	0.83	1H13 down
	Keladi	193	0.255	7.0	3.7	0.5	2.2	0.34	1H13 flat
	Ken	144	1.50	18.3	8.7	6.0	4.0	1.77	1H13 down
	L&G	215	0.36	7.4	4.9	x	x	0.56	1Q14 up
	LienHoe	119	0.33	27.5	1.3	x	x	0.77	1H13 loss
	Menang	159	0.60	6.5	9.2	x	x	0.67	loss to profit
	Sapres	131	0.94	22.1	4.2	8.6	9.2	2.43	1H13 flat
	SBCcorp	138	1.68	32.5	5.2	4.0	2.4	3.59	1Q14 flat
	Sentoria	277	0.63	12.7	5.8	14.0	1.6	0.48	3Q13 down
	Y&G	108	0.70	3.2	21.9	x	x	1.11	1H13 flat

x - not dividend declared
* - dividend not fully declared for the FY

Those companies with low PE ratio in the list are likely to be undervalued. However, the EPS and PE for the latest full financial year may not give us the true picture, as some of the figures are affected by one-off extraordinary gain or loss during the financial year under review.

The tables do not include other important financial ratio such as ROE, gearing etc. Readers are advised to do their own homework to find out more.

With the numbers available here, lets derive some Top 10 companies for fun.

Top 10 Largest Market Capitalization

	Rank	Company
	1	UEMS
	2	SP Setia
	3	Sunway
	4	IJM Land
	5	IGB
	6	Mahsing
	7	UOA Dev
	8	E&O
	9	Tropicana
	10	Selangor Prop

Top 10 Companies with Lowest PE Ratio

	Rank	Company	PE x
	1	Lien Hoe	1.3
	2	Hunza	3.0
	3	Keladi	3.7
	4	Symphony Life	3.9
	5	Sapura	4.2
	6	Amcorp Prop	4.7
	7	L&G	4.9
	8	SBC Corp	5.2
	9	Sentoria	5.8
	10	Country View	5.9

Most of the low PE ratio in the table above are not "justifiable" due to one-off gain and these companies may not be able to match the financial result for the next financial year.

Top 10 Companies with "Justifiable" Low PE ratio

	Rank	Company	PE x
	1	L&G	4.9
	2	SBC Corp	5.2
	3	Country View	5.9
	4	KSL	6.3
	4	WingTai	6.3
	5	Gromutual	7.3
	6	Selangor Dredg	8.0
	7	PJDev	8.1
	8	Matrix	8.3
	9	BCB	8.4
	9	Daiman	8.4
	9	Glomac	8.4
	10	Huayang	8.7

In my opinion, the low PE ratio of the companies in the table above may be a more accurate representative of its true value.

Top 10 Dividend Yield

	Rank	Company	DY%
	1	Country View	6.3*
	1	Tambun	6.3
	2	Huayang	5.7
	2	OSK Prop	5.7
	3	MK Land	5.6
	3	SHL	5.6
	4	Glomac	5.5
	5	Matrix	5.4*
	6	Paramount	5.3
	7	UOA Dev	5.0
	8	PJDev	4.6
	9	Daiman	4.4
	10	SP Setia	4.3

The dividend yield of Sapura Resources (9.2%) is not included in the list as it is likely not sustainable. There are some companies that give bonus issue or share dividend. These are not included in the calculation of dividend yield as well. Some of the dividend are tax-exempted and some are not...

Most of the property developers carry a lot of land with them. Thus their net asset per share is usually high, although these land may not be re-evaluated for a long time. At this moment, there are a lot of companies listed in property sector trading way below their published NTA.

Top 10 Companies with share price lag behind NTA

	Rank	Company	Lag%
	1	EUPE	177
	2	CHHB	173
	3	BCB	161
	4	Sapura	159
	5	MK Land	153
	6	Asiapac	150
	7	BJ Assets	134
	8	LienHoe	133
	9	SBC Corp	114
	10	PJ Dev	96

Other Prominent Property Developers Not Listed In Property Sector

	Stock	Cap (mil)	Price	EPS	PE	Div (sen)	DY%	NTA	Remark
	Gamuda	1,0767	4.72	25.4	19.9	12.0	2.5	2.14	FY13 flat
	IOICorp	3,4701	5.39	30.8	17.6	15.5	2.9	2.14	FY13 up
	MRCB	2,460	1.49	4.3	40.9	2.0	1.3	1.03	1H13 down
	Scientex	1,258	5.47	51.0	11.4	26.0	4.8	2.84	FY13 up
	SIME	57,090	9.50	61.6	15.4	34.0	3.6	4.51	FY13 down
	WCT	2,676	2.46	38.6	7.3	7.0	2.8	1.95	1H13 down

If solely base on PE, DY and recent financial results, we can rate these property developers as below:

Outstanding: 

• Country View
• Glomac
• Huayang
• Matrix
• PJDev

Attractive: 

• Daiman
• Gromutual
• KSL
• L&G
• MK Land
• OSK Prop
• Paramount
• SBC Corp
• Tambun
• UOA Dev
• WingTai

You should study the balance sheet, financial ratios and competitiveness of these companies to determine which is the best property stock. Of course those big cap developers are not bad too, and their higher range of PE is a norm to them.