PETALING JAYA (Mar 6): Integrated marine engineering outfit Benalec Holdings Bhd is slated to make a net gain of RM8 million from the sale of two plots of land in Melaka to Asal Harta Sdn Bhd for RM18 million, or RM45 per sq ft (psf).
To recap, Benalec announced on Feb 28 that its unit Benalec Land Sdn Bhd had entered into a sale and purchase agreement with Asal Harta for the two plots measuring about 225,422.29 sq ft and 169,752.78 sq ft respectively, for a total cash consideration of almost RM18 million. The land is reclaimed land received as payment for reclamation projects in Melaka.
Research firms such as Kenanga Research had previously forecast a sale at RM28 psf. "We believe [the higher price] could be due to the land being used for different types of development, such as a high-rise building, and hence is able to fetch a premium sale price," Kenanga said in a report.
As a result, the firm has revised upwards its FY12 earnings forecast for Benalec by 13%, after imputing a higher average selling price for the group's landbank to RM30 psf from RM28 psf previously. It also expects the company to book a net gain of RM8 million from the latest land disposal.
Kenanga's net profit forecast for Benalec's FY12 ending June is RM116.5 million on the back of RM237.8 million in revenue. This marks an improvement of 21.3% and about 10.9% respectively from FY11, when the company raked in RM96 million in net profit from RM214.5 million in sales.
"We have also factored in a bigger land sales forecast in FY12 to about 80 acres (32ha) from 50 acres previously," added the research firm, which has an "outperform" call on Benalec's shares and a target price of RM2.60 based on a sum-of-parts valuation.
For 1HFY12, Benalec posted a net profit of RM57.77 million on the back of RM101.47 million in revenue, while earnings per share stood at 7.8 sen. In the previous corresponding period, it posted a net profit of RM48.87 million on RM97.43 million in sales.
Benalec said in its notes which accompany its financials that the increase in revenue was mainly due to increased activities in the reclamation works undertaken in Melaka and Port Klang, and the increase in profit was due to an increase in net gain on the sale of land of RM15.5 million.
Benalec's prospects seem bright, buoyed by "future projects in the pipeline that exists particularly in Penang, Melaka, Iskandar Malaysia, Port Klang and the Sarawak Corridor of Renewable Energy (Score)", the company said in the notes that accompany its financials.
Kenanga seems equally bullish on its prospects. "Benalec recorded a RM35 million profit from land sales, which already meets our full-year FY12 forecast of RM34 million," said the research firm. "Management indicated that there will be more land sales in 2HFY12, which could easily breach the RM45 million mark. As at 1HFY12, Benalec had successfully sold about 67 acres of land at an average selling price of RM28 psf."
The company's proposed oil and gas (O&G) terminal development in Tanjung Piai and Teluk Pengerang could also excite with more land reclamation works, added Kenanga.
In November last year, Benalec secured an agreement in principle from the Johor State Economic Planning Unit to develop 5,245 acres of prime seafront land in South Johor. It also signed an MoU with Singapore-based Rotary Engineering to co-develop an integrated petroleum storage facility on 250 acres of reclaimed land at Tanjung Piai to complement the O&G petrochemical hub in Jurong, Singapore, which is just 17km away. These ventures were well-received by the investing public, resulting in a run on the company's shares.
Benalec closed one sen down at RM1.25 on Monday. The counter has slipped almost 7% since the beginning of the year.
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