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Mitrajaya Primed For A Home Run

Wednesday, 12 January 2011

Extract from The Edge (11/01/11)

Mitrajaya Holdings Bhd (Jan 10, RM1.80)

Not rated: RM1.59: Our screen of small-cap contractors drew our attention to Mitrajaya Holdings Bhd, which remains at a
compelling CY11-12 price to earnings (P/E) of only 3-3.4 times valuations despite its share price surge over the past
week.

The stock is also trading below its net tangible asset of RM2.26. There is more than 100% share price upside to our
RNAV (revised net asset value) estimate of RM3.30 per share, 52% of which comes from its landbank, with the jewel
being the 100 acres (40 hectares) in South Africa.

Our RNAV estimate works out to about seven times CY12 P/E. Revival of sector news-flow over the next few months
should boost investor sentiment on the construction sector which should continue to be positive for the stock.

The main potential re-rating catalyst is contract awards. Another positive is its attractive dividend yield of over 6% which
is the highest among the contractors in our coverage.

We visited its management last Friday to get a better sense of the group’s operations, outlook and strategy.
We came away from the meeting feeling overall positive about the group’s prospects, both in terms of earnings
and outlook.

Mitrajaya’s track record and experience in domestic infrastructure jobs should help it get a slice of the projects
that are expected to be awarded in 2011 on the back of execution of the 10th Malaysia Plan and the Economic
Transformation Programme.

Mitrajaya’s core business is construction, mainly civil and building works. Some of the major projects which the
group has completed are KLIA earthworks (RM400 million), the five-star Andaman Resort in Langkawi (RM86 million),
North-South Expressway (Central Link) and the KLIA Expressway (RM110 million), water sport facilities at Precincts 5
and 6 of Putrajaya (RM55 million) and four levels of basement for the Federal Government Administrative Centre,
Putrajaya (RM170 million).

Its current outstanding order book of RM200 million will keep the company busy this year. Mitrajaya is bidding for more
jobs and is targeting to boost its order book to RM300 million to RM500 million by year-end.

Mitrajaya’s venture into property started in 1999 when the company acquired 250 acres in Puchong. Today, the
development is known as Puchong Prima. One property project recently completed by Mitrajaya is Kiara 9, a 41-storey
luxury condominium project in Mont’Kiara.

Mitrajaya has 54 acres left for development in Puchong Prima. Land values in Puchong Prima should appreciate over
the next few years as the LRT will pass through this development with a proposed LRT station be built in Puchong Prima.

Other landbank that is expected to be developed over the next few years include Setapak (7.8 acres), Petaling Jaya
(9.3 acres industrial land), Melaka (18 reclaimed acres) and Banting (150 acres).

In the pipeline is the launch of two projects this year with a total gross development value (GDV) of close to RM700
million. The first is 11 blocks of 6-storey duplex apartments in Puchong Prima with a GDV of around RM180 million.

The second, which will be in the later part of this year, involves three blocks of apartments in Wangsa Maju (Setapak)
with a GDV of around RM500 million. The Wangsa Maju land is just beside the Wangsa Walk Mall.

The property division has played an important role in the company over the past two years, contributing half of the
group’s earnings. Unbilled sales totaled about RM80 million as at Sept 10. Property pre-tax margin historically
ranged between 25% and 30% but amounted to 33% in 9MFY10 due to buoyant selling prices backed by strong property
demand. — CIMB Research

Source http://www.theedgemalaysia.com/in-the-financial-daily/179970-mitrajaya-primed-for-a-home-run.html

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