Why L&G is a Candidate for Privatization (Calvin Tan)

Hi guys,

By now I am posting the 3rd article on L&G,

Why I think L&G might be a candidate for privatization?

These are my reasons:

1) L&G is a Cyclical Stock like Prestar, Masteel, Insas, Jaks & others.

Prestar and Masteel are Cyclical Steel Stocks. In boom times price surge upward. In bad times prices can collapse. Same goes for Jaks as it depends on water piping business. And Insas depends on Market Trading Mood. When KLSE is hot – INSAS will rise up. If cool down INSAS share price will also go down

And L&G being a Property Stock is also subjected to quarter by quarter result. When sales of houses & condos are up – prices will go up & vice versa.

Now L&G has already completed most of its projects. So the need for acquisition of more land banks are needed.

And coinciding with Country Garden facing constrain due to China Capityal Control – Country Country together with Mayland is disposing their DAIMOND TOWHSHIP PROJECT in Semenyih to L&G.

The Chinese word “Ngai kay” is a compound of 2 words – “Crisis” & “Opportunity”

In the Crisis of Country Garden is the opportunity for L&G.

So L&G has bought up a total of 4 Housing Developments

1) 257 ACRES OF LANDS WITH COMPLETED & PARTIALLY COMPLETED HOUSES IN DAIMOND CITY, SEMENYIH

167 ACRES OF FREEHOLD LANDS IN SERENDAH, RAWANG FOR LANDED HOUSES

 

2) 15.3 ACRES OF LANDS FOR HIGHRISE CONDOS IN SRI KEMBANGAN

3) 4.6 ACRES OF CONDO LANDS IN SRI UKAY, AMPANG

4) 1.78 ACRES OF FREEHOLD LANDS IN TAMAN SRI HARTAMAS, KL FOR LUXURY HIGHRISE CONDOS

These are lands which are already converted for housing. So there is a fair price with the hope of good profits.

To Calvin there is only a 50/50 chance of success.

L&G also own hectares of lands in Kerling

See

2 Ladang Kerling Mukim Kerling District of Ulu Selangor 1,009.71 hectares….freehold….Rm48,146,000

 

To convert to acres multiply 1,009.71 by 2.471 =  2,494.99 acres

TAnd to convert acres to sq ft

Mulyiply 2,494.99 by 43,560 = 108,681,764 sq ft

Now to calculate price of land per sq ft

Rm48,146,000 divides by 108,681,764 = 44.29 sen

or a mere 44.3 sen per sq ft.

Current land prices advertised for sale in Kerling is from Rm3.00 to Rm16 psf

depending on its location, terrain & accessibilty.

And these Lands owned by L&G in Kerling are planted with both Oil Palm & Rubber trees. There are listed as biological assets.

If we just take the price of raw lands as valued by Bank Valuers here

So 108,681,764 sq ft x Rm3 = Rm326 millions

So if revalued to current market value these Kerling lands should worth this much

 

Rm326 millions – Rm48.146 millions

A SURPLUS PROFIT OF RM277 Millions

Now that GEELY has gone BIG TIME into Tanjung Malim. There will surely be a spill over boom in Kerling which is only 15 minutes away

See

 

Map from Tanjong Malim, Perak, Malaysia to Kerling, Selangor, Malaysia

 

15 min (14.1 kmvia Route 1

 

Since KERLING is only 15 minutes away from PROTON CITY Of Tanjumg Malim

There is a high possibility that Some Big Time Developer might offer to take L&G private. (Ecoworld took Focal Aims private at Rm1.40, UEM took Sunrise private. Tebrau taken over by IWCity, UMLand taken private by Syed Moktar, TMakmur taken private by Pahang Sultan & Johor Corp took Kulim private)

 

Or since GEELY will be building its futuristic Car/Submarine/plane these 2,494.99 acre of Kerling Lands might also come in handy.

No matter how you look at it L&G is bound to get a nice Windfall from its 167 acres of Serendah lands & its 2,494.99 lands in Kerling.

 

With the stroke of luck the positives for L&G now outweights its negatives.

 

Calvin & Johor Buddies are buying as L&G is now at Rock Bottom Price supported with 63% Discount to NTA with High Margin of safety. Plus a nice 9% dividend.

This L&G is another candidate for privatisation just like Kulim, TMakmur, TheStore, Super Enterprise & Wangzng.

 

Note: Johor Corp took Kulim private for building 2 Townships near booming Pengerang

There was an influx of 70,000 population into Pengerang that caused a Boom in Property prices.

So by the same token an influx of 60,000 Proton Staff & 15 Vendors into Tanjung Malim will cause a Multi Year Boom here and speading to all its surrounding regions as well.

This one catalyst will be very favourable for L&G

 

Good luck & good night

 

Regards

Calvin

Singapore