BCB Berhad (Building
Communities & Beyond)
Formerly known as Kemajuan Buditama
Sdn Bhd, listed on Bursa Malaysia as BCB Berhad in December 1996. BCB is the
largest property developer in Batu-Pahat & Kluang towns (Second and Third
largest town in Johor state). Completed over 14,000 of various properties worth
RM1.5 Billion GDV, BCB Berhad projects are spread over several towns namely,
Kluang, Batu-Pahat, Parit-Raja, Pontian, Yong-Peng, Johor-Bahru, Senawang &
Klang Valley.
Key Ratio and Statistics
·
Total
Asset RM600 million, Total Liabilities RM180 million, Total Equities RM420
million
·
Cash
Per-Share RM0.32
·
Net
Gearing 67%, highly geared like other properties company. Gearing mainly from
Kota Kemuning land which is purchased for residential development. Loan
repayment has been made progressively to reduce total gearing (cash flow
statement)
·
Book
Value Per-share RM2.04, Price to book value 0.58 times, which is very low
(based on current price 1.20)
·
Reserves
which is qualified for 1 for 1 bonus issue
·
Price
to earning 6.4 times (based on current price 1.20)
·
Debt
to Equity ratio 0.43x
·
Return
on Equity 9.3x
BCB Berhad List of Properties
BCB Berhad on-going project
·
Concerto North Kiara (Klang Valley)
High-end condominium project located
on a 5 acre land in vicinity of Mont’ Kiara, Kuala Lumpur (offering private
lift lobbies). Total GDV RM560 million, to-date RM340 million sold
·
Home Tree (Klang Valley)
High-end mixed development located on
151 acres of land in Kota Kemuning, Shah Alam, Selangor (comprising mainly 3
storey bungalows and shop-lots). Phase 1 fully sold, Phase 2 to be launched in
December 2014. Total GDV RM1.8 billion, to-date RM280 million sold.
·
Bandar Putera Indah Topaz, Ruby,
Citrine, Crystal (Batu-Pahat, Johor)
Mixed development located on 390
acres land in Batu-Pahat (comprising mainly single and double story terrace
house). Total GDV RM1.1 billion, to date RM100 million sold.
·
Elysia Park Residence (Medini
Iskandar, Johor)
High-end 6 tower blocks located on a
7.81 acre of land in Medini, Iskandar Malaysia, located right in front of
Gleneagles Hospital (walking distance to Legoland and view of Singapore). Total
GDV RM1.2 billion (to be launched on 2nd half of 2015)
Year to date, BCB launched a total estimated GDV of RM4.66 Billion worth
of projects, which will provide a sustainable earnings over few financial
years.
BCB, Unfair MGO Price
Owner Datuk Tan Seng Leong, through
their subsidiary, Evergreen Ratio Sdn Bhd acquired 22.55 million shares in BCB
Berhad representing 11.26% of the issued and paid up capital, which total
brought up a sum of its existing shareholdings to 44.08%, triggering a
mandatory general offer MGO for the remaining shares in BCB berhad. Takeover
price (RM1 or 0.49 times price to book value) doesn’t seem to attract any
takers due to several reasons. Firstly there are many freehold land banks that
are yet to be revalued (Refer to list of properties and the date of
revaluation). We estimate a net book value of RM2.50-RM3.00/share upon
revaluation of its land banks and property assets. Hence, we concur with KAF’s
independent advisory opinion that the takeover price is “unfair” and
“unreasonable”. The privatization would likely not go through. In any case, the
circular to shareholders has stated that the owners intend to maintain the
listing of the company.
BCB, riding the wind of High Speed Rail
As planned earlier in the Economic
Transformation Program (ETP), Southern Corridor High Speed Rail (HSR) announcement
will took place in the 2nd half of 2015. HSR, which will officially
connect Kuala Lumpur with Singapore, is expected to commence in the early 2016
and target to be operational by 2020.
Note that, the initial path of HSR connects Kuala Lumpur,
KLIA, Seremban, Melaka, Muar, Batu-Pahat, Johor-Bahru and finally Singapore.
BCB Berhad, is among the largest developer in Batu-Pahat and owns a lot of
freehold land banks that are yet to be revalued (Refer to the list of
properties above). News flow on the soon-to-be announced HSR would be welcomed
and should generate significant interest on the stock. We believe that upon completion
in 2020, value of their Batu-Pahat land banks could potentially double or
triple in value.
How much is this
company’s share worth?
Having gone through the company’s background and development
projects, we now come to the most important question… what is BCB worth?
BCB is currently trading at a historical PE of 6.4 times.
Comparing this to valuations of other smaller property development companies
listed on Bursa (see below), the stock appears cheap.
Our
conclusion, BCB Berhad is a worthy investment consideration and an undervalued
company yet to be discovered.
Note: BCB
Berhad is also one of the fastest growing company featured in Focus Malaysia
this week
Target Price
Worse Case --- RM1.73
Base Case --- RM1.94
Best Case --- RM2.16
