Strong earnings growth, grossly undervalued
§ Large landbank in Iskandar Malaysia (IDR) makes KSL poised to benefit from improving Singapore-Malaysia ties and the integrated resorts in Singapore.
§ Has one of the highest margins in the industry due to its unique business model of keeping construction works in-house, efficiently use of landbank and low land acquisition cost.
§ Under-researched company.
§ Step-up in earnings driven by new flagship Bandar Bestari project in Klang.
§ Stable and recurring earnings from KSL City mall and hotel, on top of bread and butter Johor townships.
§ We forecast 44% earnings growth for FY11 based on assumption of 40% project margin.
§ Price target of RM2.43 per share is based on 30% discount to RNAV. This implies potential capital appreciation of 50%.
