PPedana has made a new high

Background

Putrajaya Perdana Bhd ('PPedana') is involved in the construction and property development sector. It was formed in 1998 as a joint venture between E&O Property Development Bhd and Putrajaya Holdings Bhd.

In its prospectus prepared for its listing last year, PPedana's outstanding works from its ongoing projects was reported to be about RM1.3 billion. Some of these ongoing projects are the Pavilion shopping complex in Kuala Lumpur, Dewan Bandaraya Kuala Lumpur Tower and Marc Service Residence apartments.

PPedana's property development activities mainly involve the development of Precinct 16 in Putrajaya. The precinct covers some 110 acres and is earmarked for commercial and residential development.

Upon the listing of PPedana, Eastern & Oriental Bhd will still hold a direct and indirect stake of about 50% in the company, making it the controlling shareholder.

Recent Financial Results

Since its listing in October 2006, PPedana has reported 2 quarterly results. Based on the latest result announcement for QE31/12/2006, PPedana's net profit has increased 24.1% q-o-q or 19.2% y-o-y to RM9.9 million. Its turnover has increased by 8.1% q-o-q or 126% y-o-y to RM144.7 million.



Valuation

Based on its last 2 quarterly EPS totaling 13.7 sen, PPedana's full year EPS may touch 27.4 sen. At this EPS and basing on the share price of RM2.06 at the close of today (March 12), PPedana is now trading at a PE of 7.5 times. This is a fair PE multiple for a medium-size constractor-cum-property developer.

Technical Outlook

For the past 4 months, PPedana's share price has been trading in a range between RM1.66 & RM1.82. It had broken above this range at the end of February but, due to the recent broad market correction, PPedana's share price has re-traced back into the range. On March 7, the PPedana has another rally that is more successful than the last one. This current rally has managed to break above the range as well as exceeding the high of RM2.01 recorded on its first day of listing. With this bullish breakout, I believe the stock may have more room to go before the rally begins to exhaust itself.


Chart: PPedana's daily chart as at Mar 9, 2007

Conclusion

PPedana is a reasonably priced constractor-cum-property developer as it trades at a PE of about 7.5 times. It is linked to E&O Group, which is a very successful property developer. In view of the bullish technical outlook for the stock, I would recommend a BUY on weakness, especially on retreat to RM2.00.