Malton surges on Pavilion REIT IPO talk

KUALA LUMPUR: The positive sentiment from news that Pavilion REIT may debut on Bursa Malaysia as early as next month appears to have rubbed off on Malton Bhd, which shares a similar controlling shareholder.

The fourth most actively traded counter, on Thursday Malton rose as much as 7.8% to 62.5 sen in intra-day trading before closing at 61 sen, up a fourth straight day on heavy volumes. on Thursday's volume of 33.2 million shares was just under 8% of Malton's share base of 418.02 million shares. At the close, the stock had surged 56.4% or 22 sen from the year's low of 39 sen on Aug 9, but is still down 16.4% year-to-date.

Bloomberg, quoting unnamed sources, on Monday reported that Pavilion REIT — part owned by the Qatar Investment Authority as well as Malton's chairman Desmond Lim Siew Choon and his spouse — was looking to raise RM800 million from a planned flotation of Pavilion REIT. At RM800 million, the Pavilion IPO would be Malaysia's fourth largest share sale this year, after Bumi Armada Bhd, UOA Development Bhd and MSM Malaysia Bhd. Pavilion is a flaghip development comprising a 1.4 million sq ft retail mall with 450 outlets, plus one office building and two residential towers in KL city.

The news may have highlighted Malton's undemanding valuations to investors. Based on Malton's net asset value of RM1.46 as at June 30, the counter was trading 0.42 times its book value. The stock was trading at 2.9 times historical earnings.

Malton saw its net profit for the financial year ended June 30, 2011 up 33.3% to RM462.39 million from RM346.92 million a year ago while net profit surged to RM72.55 million from RM22.07 million. Earnings per share jumped to 20.83 sen from 6.33 sen previously.

The company said its ongoing development projects namely Amaya Maluri, V Square, Bukit Rimau Shops and The Grove together with its ongoing construction and project management contracts were expected to contribute positively to its earnings for financial year ending June 30, 2012.

"With the completion of the company's rights issue of RM139.34 million nominal value seven-year 6% redeemable convertible secured loan stocks in early July 2011, the group is also expected to save interest costs arising from retirement of borrowings with higher interest rates and enhance its earnings via acquisitions of new land in strategic growth areas such as the Klang Valley, Penang and Johor for future development," it said in a recent announcement to Bursa Malaysia.

Malton, which currently has a RM255 million market capitalisation, on Tuesday hired Chia Lui Meng, former director at Naza TTDI Sdn Bhd, as its CEO.