Here's an extract from malaysiafinance.blogspot.com:
In the Annual Report dated Dec 2008, the Chairman stated: "Our planned sale of the Bangi land is still on track and we hope that it can be confirmed within the first half of 2009. Once this is concluded, we will then be able to focus on the expansion of our plantation sector either into Sabah, Sarawak, Indonesia or other ASEAN countries."
Catalyst #1: Inch Kenneth has converted its 600-acre piece of plantation land in Bangi in 2007. This marks the successful conversion of its entire plantation land bank for mixed development purpose and brings the company one step closer to realising its land bank unlocking strategy. Its 350 acres of plantation land in Kajang had received the conversion approval back in 2001. The group expects to sell the 600-acre Bangi land for an estimated RM250-300m, which is equivalent to RM11.50 psf on the high end. Based on this price, the company could realise a windfall gain of RM144m as the land is carried in the company’s books at just RM6 psf. With 420m shares, the market cap at the share price of 0.44 = RM184.8m. People, the windfall gain is nearly 80% of the existing market cap!!!!!!!!!
Catalyst #2: The 350-acre land in Kajang has been earmarked for the development of a township project and will be Inch Kenneth’s maiden property development foray. Although the company’s lack of experience in property development is a cause for caution, it will be doing this with joint-venture partners on this front. Herein lies the key, the full name of the company is Inch Kenneth Kajang Rubber. Kajang... 10 years ago, nobody would bat an eyelid, today, 350-acre in Kajang means a lot. The estimated gross development value of the township is slated to be between RM1.2bn-RM1.5bn.
The sharp jump was probably due to certain "sale being done" and the launching of the property project. Despite the sharp jump, its still very very cheap no matter how you look at it. If you sit on a high NAV and your share price is at a deep discount, it will stay that way if nothing is done to unlock the values. Inch Kenneth is selling the land and launching the property project - what more do you want, if this is not unlocking, I don't know what is. Last known NAV is RM1.15, and that is being conservative. There is no need to mention much about its diversion into tourism, its a safe and small business for now. How I wish there was a rich backer for me to take over this company, there is so much value to unlock - if its there to be taken over, a new owner would easily pay up to 80-85 sen per share for control.
According to RHB Investment Bank, the 1997-1998 financial downturn was followed by active M&A activities. Remember banking mergers, and corporate restructuring of GLC such as Sime Darby and MRCB? Hence, we should expect that 2010 would be the year of M&A (history does repeat.). Below is the extract from RHB Invest report:
Bigger M&A wave is coming. We believe a bigger wave of M&A activity is coming. The four key sectors are:
o Property. We note that some property developers have begun to explore expansion plans in Malaysia and overseas. In Malaysia, we note Glomac’s purchase of development land in Selangor (43 acres in Sungei Buloh at RM4.80 psf and 7.62 acres in Pekan Kayu Ara at RM85-100 psf), and Mah Sing’s purchase of 12.91 acres in Bukit Jelutong, Shah Alam for RM37.79 psf. In China, SP Setia has a joint venture to develop 25 acres of land in the Zhejiang province, while Sunway City has a joint venture to develop 98.8 acres in Tianjin. More interestingly, all these acquisitions and joint ventures were announced over the last two months. As for the sellers, we note that in Nov, UEM Land proposed to sell 4.2 acres in Puteri Harbour, Nusajaya at RM145 psf, although we highlight that the land was sold to a Khazanah Nasional subsidiary Themed Attractions and Resorts for the development of an indoor theme park, retail centre and hotel. Due to the high capex requirement for infrastructure in Iskandar Malaysia, we expect these land sales and joint ventures with developers (including the earlier proposed jv with United Malayan Land) to continue.
Looking at Glomac and SP Setia balance sheet, you should be able to see that these companies have FCF of 0.10 and 0.13 per share, respectively. With a strong balance sheet, these two companies are ready to take out any smaller, highly geared, under managed companies, to replenish their land bank, and to expand.
Therefore, I expect that Inch Kenneth will be a takeover subject in 2010. Even if it is not, the company is already starting to unlock its value. The recent quarter earning shows a positive EPS, and their EPS has been improving. Let see what will happen to this company.
Disclaimer: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on my Facebook's Note is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
source: malaysiafinance.blogspot.com
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