InsiderAsia’s Stock Pick: KEN Holdings

by **Cals** Sat 01 Nov 2014, 22:55

InsiderAsia’s Stock Pick: KEN Holdings

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KEN Holdings Bhd is a highly profitable developer that has carved out a reputation for building environmentally friendly “green” properties, which are affordably priced in well located areas.
The company also has one of the highest margins among developers, with pre-tax margins of above 36% for the last five years. Between 2009 and 2013, its sales increased from RM31.2 million to RM55.8 million while pre-tax profit rose from RM11.9 million to RM28.3 million. Net profit, meanwhile, increased from RM9.9 million to RM20.9 million.
Ken started in 1980 as a contractor and pioneered the use of soil nailing for slope protection works. In 2000, it ventured into property development with the Ken Damansara project.
Ken’s major ongoing project is the RM1.03 billion Ken Rimba township in Shah Alam, where the company is currently completing double-storey terrace houses, and is launching condominiums.
For the future, it is planning a mixed development in Johor Bahru with estimated gross development value (GDV) of RM1.22 billion. The project sits on a 22.8-acre plot of land acquired in 2012 for just RM56.2 million and is located 2.5km from the CIQ complex. The company also has 19.4 acres of land in Genting, 10 acres in Malacca city centre and 2.5 acres in Batu Ferringhi, Penang.
For investment properties, Ken expects recurring income of RM15 million per year starting 2015 from the RM120 million Ken TTDI, a 13-storey office at the affluent Kuala Lumpur suburb of Taman Tun Dr. Ismail.
Ken has a market capitalisation of RM185.53 million with a debt-free balance sheet. The company has net cash of RM6.1 million as at end- June 2014. Its shares are trading at a reasonable P/E ratio of 7.7 times and price-to-book value of 0.97 times with a 2.2% dividend yield.
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This article first appeared in The Edge Financial Daily, on October 31, 2014.