Plenitude- a value stock

Background

Plenitude Bhd (“Plenitude”) is involved in property development & investment. Its major projects include Taman Desa Tebrau in Johor Bahru, Taman Putra Prima in Puchong, Bandar Perdana in Sg. Petani and Changkat Kiara in Sri Hartamas. Its property development is likely to last for the next 10-15 years as it has a large landbank of about 2000 acres, located in Johor Bahru & the Klang Valley.

Plenitude proposed a niche development of condominium and semi-detached houses in Penang known as Bayu Ferringhi luxury residences, which comprises 112 units of luxurious condominiums and 44 units of exclusive semi-detached villas. This development, which sits on a piece of freehold land measuring 10.76 acres, is expected to be completed in June 2011 for the three-storey semi-detached homes and in March 2012 for the condominiums respectively.

Results Update

Plenitude's net profit increased by 97% q-o-q or 126% y-o-y to RM23 million while the turnover increased by 89% q-o-q or 202% y-o-y to RM109 million.


Table 1: Plenitude's 8 quarterly results


Chart 1: Plenitude's 14 quarterly results

Valuation

Plenitude (at RM2.80 as at 11.00am) is trading at a PER of 4.1 times (based the last 4 quarters' EPS of 68 sen). At this multiple, Plenitude is deemed very attractive.

Technical Outlook

Plenitude has what I considered a friendly chart, which is to say its chart is relatively easy to analyze. Since its listing in end-2003, it has trended very well. From early 2004 to end 2006, it was in a downtrend. From early 2007 to the middle of 2008, it was in an uptrend. From the middle of 2008 to early 2009, it was in a downtrend. Since then, it was in an uptrend. Right now, the stock is at a crossroad. If its 10 & 20-week SMA line were to cut below the 40-week SMA line, Plenitude could be embarking on its next downtrend. So, Plenitude's technical outlook is a shade negative unless we can see a steady rally from hereon.


Chart 2: Plenitude's weekly chart as at Feb 23, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Plenitude is a good stock for long-term investment. The slightly negative technical outlook is a damper for this stock, which should temper our enthusiasm somewhat.