Thursday, March 22, 2007

The Little Bull Terrier

Nusajaya's Mascot

As investors focus on UEM World, Gamuda, Mulpha, Tebrau... etc... now that the catalysts predicted are in motion, I would like to point out that investors should keep an eye also on the little bull terrier in Ekovest. A spv named Kota Selat Tebrau Sdn Bhd has been established to undertake the development of the Danga Bay project in IDR. Danga Bay Sdn Bhd holds a decent size 1,380 acres in a very prime area, and is controlled by Lim Kang Hoo. Kota Selat Tebrau will have Khazanah as the majority lead partner with Kumpulan Prasarana Rakyat Johor, and Lim will inject all or most of Danga Bay into the spv. If all of Danga Bay is injected, the transaction could be in the region of RM350-400m or around 20%-25% stake in the spv. Danga Bay is prime because the land actually faces Singapore.

Ekovest could be brought into the picture because Lim Kang Hoo controls Ekovest and if you look at the trading history for the past few months, it looks like most of the shares have been collected. In fact, in August Ekovest has proposed to buy a 30% stake in Danga Bay Sdn Bhd, but the deal was left hanging following the embargo by the government on all land deals in IDR (that has since been lifted).

Kota Selat will be a crucial vehicle as it will include land from Danga Bay and also from Tebrau (controlled by Kump Prasarana Rakyat Johor). The gross development value for Kota Selat is in the region of RM6-10bn just over the next 5 years. The deal is apparently quite advanced already as the famed British architectural firm Atkins Group (not the carbo group) has been roped in to do the masterplan for Kota Selat. Kota Selat has to make the first move as it has the best piece of real estate, and what it does will drive the surrounding developments.

Currently Ekovest already has RM3.2bn in outstanding order book, which include: land reclamation for Danga Bay (RM479m); Universiti Malaysia, Sabah, Phase 2B (RM366m); Kolej Universiti Teknologi Tun Hussein Onn campus (RM541m); construction for National Institute for Natural Product, Vaccines and Bilogicals (RM1,200m) are among the more prominent ones. When you add the 30% stake plus a chance to get some of the works for Kota Selat, its a bumper period ahead for Ekovest.

At below RM2.50, the stock only has 134.4m shares making its market cap at just RM336m. Last two years saw its pretax profit at just RM9.2m and 13.7m respectively for 2005 and 2006. A more important guide would be its P/NTA which is at 1.35 only, not demanding when you take into account what's in store. No debt and RM0.36 cash per share. This little bull terrier could surpass its bigger IDR-plays collegues in terms of percentage gains. Watch out.

1 comment:

Jomaropol said...

Spot on Salvatore! Finally I got my account to work.