Thursday, January 02, 2014

SPB- broke above its 2011 high of RM4.55

Selangor Properties Bhd ('SPB') has surpassed its 2011 high of RM4.58 4 weeks ago. The upside breakout happened in late November but the rally was cut short by the announcement of the takeover offer for its subsidiary, HELP International Corporation Berhad ('HELP') on December 5 (here). The share price eased back to the breakout level of RM4.55 and the stock rallied again in the past 6 days. See Chart 1 & 2 below.

Chart 1: SPB's daily chart as at Dec 31, 2013 (Source: Tradesignum)

Chart 2: SPB's weekly chart as at Dec 31, 2013 (Source: Tradesignum)

From Chart 2, we can guesstimate that if SPB can recruit enough support, the stock may rally to a target price of RM6.00. This target price is arrived at by adding the distance traveled from the trough in 2012 to the 2011 high (about RM1.40) to the breakout level at RM4.55 (or, RM4.60).

SPB is a profitable property developer and investment company. The biggest complain among its shareholders is the conservative management that failed to realize its valuable land bank. I have tabulated its past 12 years results in the form of a table and a chart below. If you look through its annual report for 2012 (go here), you will see its substantial land bank.

 Table: SPB's past 12 years results

Chart 3: SPB's past 12 years results

Are investors finally recognizing the under-valuation of the land bank in SPB. That's my view after analysing HELP's annual report. I feel that HELP could be a target for takeover because of its land bank in addition to its business.  I have listed below the 3 properties owned by HELP.

Wisma HELP, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur
11-storey building known as Wisma HELP (University Campus)
Freehold Land: 43,292 sq ft
Built-up:269,086 sq ft
Age: 33 years
NBV: $30,058,000
Date of Acquisition: 27.11.2003
HELP Residence No. 28, Jalan Damansara, Damansara Heights, 50490 Kuala Lumpur
21-storey building known as HELP Residence (Hostel Building)
Freehold Land: 11,969 sq ft
Built-up: 151,955 sq ft
Age: 5 years
NBV: $46,097,000
Date of Acquisition: 5.5.2010
PT 12291 Seksyen U4 (Subang Delima), Mukim Sungai Buloh, Daerah Petaling, Negeri Selangor
Land for private education
Leasehold for 99 years expires on 5.5.2109
Land area: 23 acres
Age: N/A
NBV: $22,615,000
Date of Acquisition: 17.6.2010
A map of the location of HELP's own properties and rented properties are shown in the map below. This map will show the central location of this part of Damansara Height area where SPB has a few properties.

Map: HELP's premises in Damansara Height area

If HELP's properties are enticing, SPB's properties will be equally enticing. Thus, the play on this stock.

Based on technical breakout, SPB could be a good stock for trading BUY.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, SPB.

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