MKH 'grossly oversold' despite intact fundamentals - AllianceDBS

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KUALA LUMPUR (Sep 11): MKH Bhd shares are deemed "grossly oversold" despite the property developer's intact fundamentals, according to AllianceDBS Research Sdn Bhd.

In a note today, AllianceDBS analyst Quah He Wei said MKH's share price had fallen 15% from its peak, partly due to weaker-than-expected third quarter results. Quah, however, said MKH was one of the few stocks under AllianceDBS' coverage with visible growth prospects.

“While overall sentiment in the property market remains weak, we believe MKH will be the least vulnerable to the slowdown given its focus on affordable housing, which targets genuine buyers.

“This is evident from its record-breaking property sales, bucking the trend of lower sales among its peers. MKH’s unbilled sales of RM690 million is at an all-time high, and demand remains unabated in KL South, largely due to the attractively priced affordable homes,” Quah said.

Quah said MKH's plantation segment had seen impressive growth after recording a pretax profit of nearly two times.

“Plantation is another key growth driver for MKH. 9MFY14 fresh fruit bunches (FFB) volume grew 36% year-on-year, resulting in an impressive 190% growth in 9MFY14 plantation pretax profit. We acknowledge the weak crude palm oil prices at this juncture, but its exponential 3-year FFB volume compounded annual growth rate of 20% will more than offset the bearish prices,” Quah said.

Quah maintained AllianceDBS' "buy" call on MKH shares with an unchanged target price of RM5.70.

At 10:12am, MKH shares fell one sen or 0.3% to RM3.69.