KSL has a bullish breakout at RM1.60

KSL is a Johor-based property developer. It has a sizeable landbank of 3,500 acres in Johor but it has recently added a small parcel of land of 30 acres in Putra Heights, which shall be its first venture in the Klang Valley. This land is located near the North-South Expressway Central Link. KSL's current projects in Johor are Tmn Nusa Bestari, Tmn Bestari Indah & Tmn Kempas Indah.

Its net profit for the last 4 quarters of RM70.5 mil is 10.6% lower than the preceding 4 quarters' net profit of RM78.9 mil. Turnover during the periods has inched up by 1.1% from RM277 mil to RM280 mil. See the table below.



Based on the last 4 quarters' EPS of 26.53 sen, KSL (closed at RM1.62 as at December 26) is now trading at a PE of 6.1 times. As such, KSL's valuation is deemed undemanding.

From the weekly chart below, we can see that KSL has broken above its downtrend line in the w/e May 5, 2006 at the RM1.45 level. The stock has however been trading in a range between RM1.20 & 1.60. Yesterday, it broke above the RM1.60 level on thin volume. If it can recruit enough support, the stock could be commencing its upside very soon. The catalyst for thsi upside move could be the pick-up in demand for its properties (which are mainly based in Johor) since the relaxation of properties acquisition by foreigners.


Chart: KSL's weekly chart as at Dec 26

Based on reasonable valuation & potentially bullish technical set-up, KSL could be an attractive investment for the medium term.