Small Market Cap, Huge GDV

Author: Icon8888 | Publish date: Sun, 12 Apr 2015, 01:07 PM

Executive Summary

(a) Driven by a whole host of factors, the Malaysian property industry has not been doing well since second half of 2014. Instead, many investors shifted their attention to export oriented companies.

(b) However, I have not given up entirely on the industry. I always have a soft spot for small cap property developers. Unlike big developers with multi billion revenue and / or net profit to worry about, small developers can survive by getting one or two small projects right. Small market cap is also more conducive for high growth.

(c) I have been eyeing Eupe since April 2014 when it announced that it is venturing out of its home turf, Kedah into Klang Valley. They bought three small parcels of land in Bangsar South, Cheras and Seputeh respectively. This has generated some interest among investors. However, I have decided not to invest in the stock at that time as I believed it was still early stage.

(d) Fast forward to 2015. The company recently started advertising in newspapers about their projects in Bangsar South and Cheras. I took a closer look and discovered that both projects are located near LRT stations. It is too early to say how well they will do. But I guess being closed to LRT stations does make things a bit easier.

(e) The company has 50% and 70% equity interest in Bangsar South and Cheras project, with GDV of RM460 mil and RM260 mil respectively. As such, effective GDV for the two projects is approximately RM412 mil. On top of that, the group has 1,000 acres landbank and several development projects in Kedah and also few acres of land in Seputeh, KL.

(f) I bought into Eupe because of its potential. As at the date of this article, the company has market cap of slightly more than RM100 mil. It reported net profit of RM11.2 mil over past 12 months. If the projects work out well, there is decent chance that profit will grow by leaps and bounds (I will leave it to your imagination).

(g) If you are interested in this stock, I would suggest that you take your time to slowly build up position. There is no need to hurry to chase the stocks. It will easily take another, let's say, 9 to 12 months to see development profit slowly trickling in.

BUY AT OWN RISK

Eupe Corp Bhd (EUPE) Snapshot

Open 0.84		Previous Close 0.83
Day High 0.84		Day Low 0.84
52 Week High 04/23/14 - 1.10		52 Week Low 03/2/15 - 0.70
Market Cap 107.5M		Average Volume 10 Days 40.7K
EPS TTM 0.09		Shares Outstanding 128.0M
EX-Date 11/11/14		P/E TM 9.3x
Dividend 0.02		Dividend Yield 1.79%

The group has strong balance sheets. With net assets of RM281 mil, loans of RM47 mil and cash of RM19 mil, net gearing is approximately 0.1 times only.

Annual Result:

F.Y.	Revenue ('000)	Profit Attb. to SH ('000)	EPS (Cent)	PE	DPS (Cent)	DY	NAPS
TTM	184,182	11,599	9.06	9.28	0.00	-	2.1900
2014-02-28	186,119	12,923	10.10	7.73	2.00	2.56	2.1300
2013-02-28	146,638	14,845	11.60	4.49	-	-	2.0500
2012-02-29	143,052	7,771	6.07	8.57	-	-	1.9300
2011-02-28	124,166	4,980	3.89	12.86	-	-	1.8800
2010-02-28	108,685	3,591	2.81	18.15	-	-	1.8400

Quarter Result:

F.Y.	Quarter	Revenue ('000)	Profit before Tax ('000)	Profit ('000)	Profit Attb. to SH ('000)	EPS (Cent)	DPS (Cent)	NAPS
2015-02-28	2014-11-30	40,878	6,866	3,392	3,435	2.68	-	2.1900
2015-02-28	2014-08-31	46,669	4,111	3,506	3,544	2.77	-	2.1700
2015-02-28	2014-05-31	46,602	1,531	815	731	0.57	-	2.1400
2014-02-28	2014-02-28	50,033	5,671	4,043	3,889	3.04	-	2.1300
2014-02-28	2013-11-30	52,705	6,339	3,475	3,243	2.53	-	2.0800
2014-02-28	2013-08-31	46,681	5,331	4,052	4,244	3.32	-	2.0700
2014-02-28	2013-05-31	36,700	2,709	1,774	1,547	1.21	-	2.0600
2013-02-28	2013-02-28	31,219	5,704	3,269	3,103	2.42	-	-