Others Stock

[KM] keladi

Keladi Maju Berhad

Accumulate for an upside target to 19sen

Keladi is due to announce its Q4 result by this wk or by end of this month. Together, keladi will likely declare similar payout of at least 1.5sen dividend, or 9% yield, which in turn could act as calatyst to spur share higher, every half sen movement already in profit.

keladi mainly drive profit from property development in kulim and harvest fresh fruit from palm oil plantation. With consistent earning from both property and plantation, EPS is well sustain above 1.5sen and range up to 2.4sen. Therefore, dividend of 1.5sen gross or 1.13sen net only make up of 50%-75% annual payout. What is more interesting is that keladi is cash-rich company, forming nearly 45% of current share price (7sen/share). With limited capex, these cash reserve could be opt to payout as special dividend.

Company background

Keladi key businesses are property development and property investment in

Kedah. It specializes in low and medium cost residential projects, commercial

offices, light industrial factory buildings for SMIs. KM has established a name

and solid reputation, especially in developing affordable quality properties,

delivered on timely basis.

KM’s major flagship projects include Taman Mutiara, Taman Mahsuri and

Taman Lagenda. Due to its strong management, it has consistently achieved

an average net profit margin of 21% over the last 10 years.

Technical outlook: Oversold, accumulate at 15sen

KM’s share price has surged from 52-wk low of RM0.105 in Mar 09 to 52-wk

high of RM0.19 in May 09 before consolidating range bound between RM0.15

to RM0.175 for the last nine months.

We are optimistic of KM’s mid to long-term technical outlook as share prices

continue to maintain its posture along the RM0.15 (250-d SMA) over the past 9

months. Key support is RM0.14 (61.8%FR from RM0.105-0.19) whilst the

upside resistance levels are RM0.16 (38.2%FR), RM0.17 (23.6% FR) and

RM0.18 (8-month high).

12M target price at RM0.19

Our 12-month target is RM0.19, based on 8.6x FY10 PE (in line with its 5-year

average 9x PE) and 0.83x PBV (5-year average 0.9x). At 8.6x, KM’s target PE

is also trading at 25% discount to its peers historical PE of 11.4x.

At 15.5sen, KM’s 9.7% dividend yield is the highest in the property sector.

Furthermore, its 7.1sen net cash per share is 46% of current share price. On an

ex-cash basis, KM is only trading at 3.8x FY10E P/E. Therefore, we feel that its

downside risk is limited.
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