SHL Consolidated Bhd
UNLIKE many property stocks, SHL Consolidated Bhd is cash rich and pays good dividends, with a yield of 4.8%. The company is expected to benefit from new launches at Bandar Sungai Long, Rawang Industrial Estate and Goodview Heights, Semenyih.
SHL is primarily a property developer, but has also diversified into supporting industries such as construction, quarrying and manufacturing of bricks and aggregates. For FY March 2014, property development accounted for 92% of sales and 79% of pre-tax profit.
The company owns a 160-acre golf resort, the centrepiece of its Bandar Sungai Long development, located a 15 minute-drive from Kuala Lumpur City Centre. This development is receiving increased interest following the building of the MRT line, which has attracted more developers to the Southern Klang Valley area.
SHL supplies its own clay bricks and granites, and operates Malaysia’s largest clay brick manufacturing plant with annual capacity of 144 million pieces.
The company has a solid balance sheet. As of 1Q2015, net cash stood at RM288.96 million or RM1.19 per share, equivalent to 32.9% of its current stock price of RM3.62.
For FY2014, sales increased 12.7% to RM205.3 million while pre-tax profit surged 68.4% to RM80.0 million. Investors should, however, note that its sales have been erratic over the last five years, falling from RM249.5 million in FY2010 to RM78.0 million in FY2012 before recovering to RM205.3 million in FY2014.
For 1Q2015, SHL recorded sales of RM 52.3 million, down 11.0%, but pre-tax profit rose 75.0% to RM23.1 million, due to better sales at its Rawang project.
The stock is trading at a 12-month trailing P/E ratio of 13.9 times and a P/BV of 1.47 times. The company paid dividends of 17.25 sen per share in FY2014, translating into a net yield of 4.8%.
This article first appeared in The Edge Financial Daily, on November 21, 2014.