Tropicana’s FY14 profit to jump after land sale, says Affin

by **Cals** Thu 20 Mar 2014, 18:45

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 20 March 2014 11:24

KUALA LUMPUR (Mar 20): Affin Investment Bank Research has raised Tropicana Corporation Bhd’s 2014E net profit forecast by 74%, after the property developer sold land to Eco World Development Group Bhd for RM470.67 million or RM35 per sq ft.

Tropicana group executive vice chairman Tan Sri Danny Tan Chee Sing said in a statement yesterday the group was expected to reap a net gain of about RM170 million from the sale of the 308.72 acre land.

In a note today, Affin IB said on a per share basis it raised Tropicana’s 2014E earnings per share (EPS) by 35.2%.

However, the research house cut its 2015E and 2016E EPS forecast by 15.2% and 4.9% respectively due to conversion of RM361 million redeemable convertible unsecured loan stocks (RCULS) into 278 million new shares by Tan Sri Dato’ Danny Tan in early March this year.

“After the conversion, the total RCULS outstanding has declined to RM76.3 million, convertible to 50.9 million or 58.7 million shares depending on the timing of conversion,” said Affin research analyst Isaac Chow.

“We have lowered our revised net asset value (RNAV) estimate to RM3.61 from RM3.64, to reflect the gain on disposal and the recent conversion of RCULS.”

Nevertheless, Chow said he raised target price for Tropicana to RM1.80 and maintained ‘buy’ for the stock at RM1.43.

“We continue to like Tropicana for its strategic land bank, undemanding valuation of 0.4x P/RNAV and its ongoing asset monetisation and de-gearing exercise.

“The disposal of Canal City land to Eco World (along with RM170m gains) is a good start for 2014,” he said.