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Wednesday, August 15, 2012

Asas- a hidden gem waiting to be discovered

Background

Asas Dunia Bhd ('Asas') is involved in construction & property development. It is a small developer, with sizable land bank in Seberang Prai- near the Second Bridge connecting Penang to the mainland. See the map below.


Map: The Map of Penang & Seberang Perai (Source: 3.bp.blogspot)

According to the latest Annual Report for FY2011 (page 93-94), Asas has a few pieces of development land in Seberang Perai that are located in the following mukim:

 
Table 1: Asas's development landbank  

All the development land are stated at cost in its book. The Group MD was quoted as saying that these lands are now worth between RM20 & RM50 p.s.f. depending on location (go here). I believe that is a fairly reasonable number. Assuming that we valued the above development land at only RM20 p.s.f., the landbank is worth about RM965 million (or giving a revaluation surplus of RM726 million). Ignoring other assets owned, the NTA of the stock is about RM5.00 (outstanding shares is 191 million).

Recent Financial Results

Asas has just released its results for QE30/6/2012. Its net profit increased by 33% q-o-q or 69% y-o-y to RM12 million while its revenue increased by 26% q-o-q or 67% y-o-y to RM46 million.

 
 Table 2: Asas's last 8 quarterly results

 
Chart 1: Asas's last 22 quarterly results

Valuation

Asas (at RM1.66 as at 12.15pm) is now trading at a PE of 10.2 times (based on last 4 quarters' EPS of 16.26 sen). For a small developer, that PE multiple is fair. The question is how the company will unlock the value of its landbank.

Technical Outlook

Asas may have broken above its strong horizontal resistance at RM1.55-1.60. Its next resistance could be at RM2.60.


Chart 2: Assas's monthly chart as at August 14, 2012 (Source: Tradesignum)

Conclusion

Based on underlining asset backing & bullish technical outlook, Asas could be a good stock for long-term investment..

3 comments:

Unknown said...

Alex,

Another one to monitor along the same hidden gem theme is possibly Southern Acids Bhd (SAB).Though it is very very thinly traded, it nonetheless owns abt 650 acres of freehold land between Kota Kemuning, Shah Alam and IJM Land's Rimbayu Development.

Unlike Asas where the landbank will be used internally for future projects,SAB has indicated that it will sell (one day!) this parcel to free up cash for their core Palm Oil business.

Whisper numbers is about RM35psf and this works out to be close to RM1 billion.With 137m shares outstanding,this works out to RM7+ per share, on top of existing businesses.Btw, the parcel of land is stated in the books at RM5 psf.

Rgds

Remnant 888 said...

Most parcels are not prime land although yes, it's a matter of longer term of time when rapid urbanisation will unlock the value.

Alex Lu said...

Hi Unknown,

Thank you for the hat tip. I will look into it later.