KSL Holdings Bhd

Long ignored by investors, Johor-based property developer KSL Holdings Bhd has recently attracted considerable attention, resulting in the stock becoming one of the top performers in the last quarter.  

Despite the price surge, KSL’s shares still offer good value, trading at a trailing 12-month low P/E multiple of 7.64 and 1.05 times book, with growing earnings and high margins.

KSL’s developments are mostly based in Johor, where it has several projects in the Iskandar Malaysia region – Taman Nusa Bestari, Taman Bestari Indah and Taman Kempas Indah. The company also owns the KSL City, a mall and hotel development in Johor Bahru, which provides recurring income.

It has since ventured into the Klang Valley and is developing a 496 acre township called Canary Garden in Klang, and a luxury condo in the KLCC area. The company has a land bank of some 2,000 acres and reportedly has unbilled sales totalling RM1 billion.

KSL’s revenue surged from RM272.26 million in 2011 to RM680 million in 2013, while net profit increased from RM 81.2 million to RM181.53 million in the same period.  For 1H2014, the company reported a 22.4% increase in net profit to RM 140.2 million on the back of a 22.5% increase in revenue.

Among property companies, KSL has one of the highest profit margins, with 32.7% chalked up in 1H14. As a result, it also has a high return on equity of 16.03%, having risen from 8.83% in FY 2011. Following this, the company has managed to reduce its gearing from 23.12% in FY 2011 to only 8% in 2013.

Historically, the company has not paid out any dividends, as it has been on an expansionary path. However, the company has recently stated its intention to have a dividend payout.

This article first appeared in The Edge Financial Daily, on October 21, 2014.