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Sunday, July 24, 2016

IBHD: A Steady Performer at A Beaten Down Price

Background

I-Berhad ('I-Bhd") is the master developer of i-City, a mixed development that spans 72ac in Shah Alam. I-City is strategically located alongside the Federal highway and is easily accessible to the NKVE. It will be connected to the Bandar Utama-Klang LRT line once this line is completed.


In addition to the i-City, I-Bhd is also involved in the development of luxurious condominiums located next to KLCC, known as 8 Kia Peng,.


Besides property development, I-Bhd owns & operates a theme park known as Theme Park @i-City and hotels (Best Western & soon-to-be-opened Double Tree by Hilton).

Historical Financial Performance

I-Bhd's transformation began in 2012. In the next 5 years financial performance, its revenue & profit grew strongly. From the half-yearly results below, we can see I-Bhd's half-yearly revenue broke above the RM20 million in 2H2012. This propelled its half-yearly net profit above RM13 million.

After a small pullback in 2015, revenue continued to grow. PBT peaked at RM40 million in 2H2013 due to the recognition of fair value gain of RM13 million from the revaluation of investment properties. After a dip in 1H2015, profits roared back in 2H2015 & continued to rise in 1H2016.


Chart 1: I-Bhd's last 10 half-yearly P&L

Recent Financial Results

The quarterly results bears only the recovery in top-line and bottom-line in the past 3 quarters. This steady grow is expected to continue in view of its strong unbilled sales (see Chart 3 below).


Table: I-Bhd's last 8 quarterly P&L


Chart 2: I-Bhd's last 10 quarterly P&L


Chart 3: I-Bhd's last 5 half-yearly unbilled sales

Financial Position

I-Bhd's financial position is deemed healthy as at 30/6/2016 with current ratio at 4.5x and total liabilities to equity at 0.5x.

Valuation

I-Bhd (closed at RM0.545 last Friday) is now trading at a trailing PER of 10x (based on last 4 quarters' EPS of 5.23 sen). At this PER, I-Bhd is deemed fairly valued.

Technical Outlook

Over the last 20 months, I-Bhd gave back almost all its gain from 2012 to late 2014.


Chart 4: I-Bhd's monthly chart as at July 22, 2016 (Source: Shareinvestor.com)

I-Bhd's bottoming phase may be nearly completion. From the weekly chart below, we can see that the stock's recent low in June is higher than the low recorded in January. If it can go above and stay above the April high of RM0.55-0.56, the stock may begin its recovery.


Chart 5: I-Bhd's weekly chart as at July 22, 2016 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, healthy financial position and sharply lower share prices, I-Bhd could be a good stock to consider for long-term investment. However, it must be noted that its valuation is not cheap and its technical outlook is at best neutral.

Note: 
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, IBHD.

2 comments:

William Leam said...

Property stock is icy, no?

Alex Lu said...

Hi William Leam

I think the property sector is slowly turning around. I believe that BNM's recent interest reduction is consistent with government policies to support the domestic economy from strong headwinds from overseas. The supporting policies would include expanded "development expenditure" (such as more construction projects) and a more lax monetary policies (such lower interest rate and other administrative regulations). I believe we may soon see a relaxation of property financing regulations which would spur a recovery in the property sector.