The Return Of MK, Impact On MK

In corporate world MK is refer to Mustapha Kamal Abu Bakar, his title is Tan Sri, so let’s call him Tan Sri MK. In stock market MK is refer to MK Land Berhad, subsidiary of Emkay Group where Tan Sri MK was a founder. Emkay Group is the well known properties developer in Malaysia. It’s subsidiary MK Land Berhad was listed on Bursa Malaysia.

In year 2000, MK Land’s share was RM4.00 but nine years later, 28 October 2008, it was only RM0.10, 40 times lower than highest price. Nevertheless it was moving slowly from RM0.10 to only RM0.16 from October 2008 till April 2009.

What made MK Land worst?.

Economic downturn has contributed to the bad performance but suppose not that bad as world economic crash in October 2008 did not badly affect our banking system, thus, the impact on properties was not as worse as year 1997.

The very low price of MK Land was mainly due to the company’s bad performance. It has made huge loss amounting RM55.70 million for financial year 2008 which ended on June. At the time when MK Land makes loss, Tan Sri MK has no longer a CEO but only as an ordinary chairman. The loss recorded by MK Land has forced Tan Sri MK return with an executive power.

As soon as Tan Sri MK returns as captain of MK Land, he has changed the strategy of business. He focus on strategic land development especially in Klang Valley and selling non strategic lands. By selling non strategic lands, it will increase cash for paying the outstanding loan, thus it will reduce gearing ratio of MK Land.

On 28 May 2009, Business Times has reported that, MK Land has posted net profit of RM13.2 million for nine months to March 2009, compared with loss of RM18 million in the same period last year in tandem with the increase in sales which jumped 180 per cent to RM185 million.

One of the project that contributed to the huge sales is The Domain Cyberjaya, where Koperasi Pelaburan Hartanah Berhad (KOPRAHA), growing investment cooperative, was one of the biggest buyer of the strategic property.

Since the income increase, MK Land aims to reduce its debt of RM500 million as at December 2008 to RM400 million by June and RM300 million by early 2010.

The township project namely Damansara Perdana is expected to drive the profit of MK Land, thus increase its earning per share.

Can we buy MK Land’s share?

From the latest financial report, NTA of MK Land is RM0.81 and as of 15 July 2009, the price of MK Land closed at RM0.41. It shows that MK Land is undervalue stock and with the existence of “orang lama” and his strategy, I believe that the market price will improve toward its NTA.

The conclusion is, “the return of MK will give an impact to MK”.

Do not overlook this stock.

- Sabri Jalil