Getting Started
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Feed you some facts to thrill all the followers here (somebody researched on this co in 2007 ) :-
"Overview
Mulpha International Berhad is a diversified conglomerate, listed since 1983, with operations and investments in Malaysia, Vietnam, Singapore, China, Hong Kong and Australia.
Australia - mainly property, hotel and car park operation.
Hong Kong and China - trading and rental of construction equipments, and manufacturing of paints.
Malaysia - property development and ownership, and general trading.
Singapore - trading and rental of construction equipments.
Vietnam - service apartments ownership and operation.
Statistics
Price at 22nd Oct 2007 = RM1.39
Shares outstanding = 1,254,971,579
Market Cap = 1.744B
Net Assets per share as of Quarterly Report on 31st May 2007 = RM1.92
Results for the past 5 years
Group Results 2006 RM‘000 2005 RM’000 2004 RM’000 2003 RM’000 2002 RM’000
Profit before taxation 55,734 368,953 95,089 105,915 38,527
Taxation 2,592 (67,913) (12,817) (37,492) (36,855)
Profit after taxation 58,326 301,040 82,218 68,423 1,672
Minority Interest (3,681) (6,644) (6,808) 8,760 (8,992)
Net Profit/ (loss) 54,645 294,396 75,410 77,183 (3,320)
EPS (sen) 4.58 23.59 6.01 5.85 (0.54)
NTA Per Share (RM) 1.80 1.59 1.35 1.26 1.00
I personally do not recommend reading too much into Mulpha's profits history. The group focuses on net tangible assets (NTA) as the key performance indicator, and their 5 years results has plenty of one-time transactional gains, most notably in 2005, when they sold 49.9% of Norwest Business Park for RM379.4M. That contributed to a whopping RM197.814M in profits for 2005.
Pros
Based on my calculations, Mulpha is currently greatly undervalued, no thanks to the limited disclosures and news flow from management.
Basis of calculation; I calculate the value of net current assets, and quoted shares that are held as investments, with total disregard to subsidiaries that accounts are consolidated into the Group's financial results. This means that FKP Limited (11.8% stake), and Mudajaya (23% stake), which does not contribute to Mulpha Int's earnings are calculated based on their market value. Mulpha Land (53% stake) and Greenfield Chemical (75% stake), are considered subsdiaries.
Working capital (Current assets - current liabilities) = RM625.524M/ RM0.50 per share
FKP Shares (Aud6.95)= RM559.304M/RM0.45 per share
Mudajaya Shares (RM3.58)= RM110.98M/RM0.09 per share
This means the market is currently valueing the remaining businesses of Mulpha Int at RM448.192m or 36 cents per share.
This consist of;
Australian Property Assets
Northwest Business Park (50.1% stake)
Sanctuary Cove
Bimbadgen Estate Vines
Cathedral Street Carpark
Salzburg Apartments
Hotels:
Inter-Continental Sydney
Hyatt-Regency Sanctuary Cove
Hayman Island
Melbourne Airport Hotel
Malaysian Property Assets
Leisure Farm Resort, Nusajaya, Johor
Bandar Seri Ehsan, Sepang
Bukit Panchor, Nibong Tebal, Penang
Taman Desa Aman, Kulim, Kedah
Seksyen 16, Petaling Jaya (land)
Jalan Sultan Ismail, KL (land)
Hong Kong and China
Greenfield Chemical Holdings
Vietnam Assets
Indochine Park Tower
To show you how cheap the 36 cents per share valuation is; i would like to point out;
i) Greenfield Chemical Holdings, based on its current share price of HKD4.74/share is worth RM386.851/ RM0.31 per share to Mulpha Int
ii) The remaining 50.1% of Norwest Businesspark owned by Mulpha Int should be worth at least Rm379.4m, if not more, which is the amount paid by FKP to acquire 49.9% of Norwest. Thats RM0.30 per share.
iii) The proposed RM148M sales of Leisure Farm Resort (inclusive of debt) would yield RM0.12 per share to Mulpha Int. The transaction had been blocked by Securities Commision.
Unfortunately, these calculations would not be fair as Greenfield and Norwest are consolidated subsidiaries. Just like all other assets stated earlier; we should value them based on earnings. However, these examples show how Mulpha can easily earn more than 36 cents per share by divesting some of its assets.
Currently, Mulpha International is controlled by the Lee family (about 38% stake), but 2 Australian funds have emerged as substantial shareholders in the past year. McKenzie Cundill has 100M shares (8% stake), and Mercury Real Estate has 68.688M shares (5.5% stake). This is most likely because of Mulpha International's deep assets portfolio in Australia.
Cons
Strip out the extraordinary gains from one-off transactions, and you will see paltry earnings. For those that are seeking stocks that provide predictable and steady profits, stay away. This is a long term play. Value in Mulpha will only be unlocked by deconsolidation of it's subsidiaries.
Currently, market sentiments are generally poor on property counters. In my personal opinion, Mulpha International's price is unlikely to appreciate until sentiments turn better.
Conclusion
Buy; at the current price of RM1.39, its a good opportunity to accumulate. I'm not able to propose a target price as I've no means to evaluate the entire assets portfolio of Mulpha International, but we can refer to the net asset price of RM1.92, which I believe is the best indicator of Mulpha's value. "
Be confident to HOLD ON !!!
Added on June 16, 2009, 6:03 pm"as Mulpha has a sizable working capital, and owns certain investments that do not contribute to its' earnings, its not fair to factor in the whole RM1.39 when calculating P/E. Both FKP (11.8% owned) and Mudajaya (23% owned), are not subsidiaries. Please note that I do not attempt to value subsidiaries/properties that are consolidated into Mulpha International's group results. Both FKP and Mudajaya can easily be disposed into the open market today for cash.
Working capital (Current assets - current liabilities) = RM625.524M/ RM0.50 per share
FKP Shares (Aud6.95)= RM559.304M/RM0.45 per share
Mudajaya Shares (RM3.58)= RM110.98M/RM0.09 per share
This means the market is currently valueing the remaining businesses of Mulpha Int at RM448.192m or 36 cents per share.
For the EPS of RM0.07 that you mentioned, this would be a P/E of 5x only.
Perhaps you would ask; why are Mulpha holding on to investments that are not contributing to the bottom line? Well, both FKP and Mudajaya's share prices have doubled up since Mulpha invested. These figures won't appear in Mulpha's balance sheet as value of investments are based on cost price.
It's very normal to strip out the net current assets + quoted investments to find the real value in holding companies. For Mulpha, everytime they deconsolidate a particular investment, earnings will definitely reduce because of dilution in earnings. For example, Norwest was contributing RM45M in profits in 2005. That figure is diluted after 49.9% of Norwest was sold to FKP. The same will happen if Leisure Farm Resort is sold to Mulpha Land. Mulpha International owns 53% of Mulpha Land, so they will only be able to write half of LFR's future profits into their books. In return however, the get cash (in LFR's case, warrants).
On whether their debts are high, I will use the debt-to-equity measurement.
Total liabilities / Total shareholders equities = RM1,306,061/ RM2,534,497 = 0.515
I did not check other property counters, but I would say that overall anything less than 1.0 is considered very healthy.
Would like to add on here that, management is doing a good job of buying back shares. In April 2007, they had bought back up to 75.415M shares, which were than sold at a price of RM1.93 (almost at the peak of this year's price) to foreign institutional investors. Prior to that, they had enhanced shareholder value by cancelling shares. As of today, they had bought back another 27.199M shares, kept as treasury shares."
This post has been edited by KucingSpy: Jun 16 2009, 06:03 PM
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Jun 8 2009, 08:37 PM
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