Plenitude shares gaining momentum

KUALA LUMPUR: Low profile and thinly property stock Plenitude Bhd recently has been chalking up good gains, catching investors' attention.

Plenitude's shares rose 15 sen or 4.08% on Wednesday, July 28 to close at RM3.83. The stock has been climbing since mid-July, hitting a high of RM3.98 on July 23, its highest level since its listing in November 2003. In the last three weeks, the stock has gained 83 sen or 27.7% from RM3 on July 7.

Sources familiar with the company said the analyst fraternity had started to take note of Plenitude, and the company had received a few calls from analysts keen to cover its stock.

According to an analyst at a local brokerage covering the property developer, the stock run-up has been a surprise.

"Plenitude usually trades in a band due to the lack of liquidity," the analyst told The Edge Financial Daily.

Part of the reason is that its shares are tightly held. A look at the company's substantial shareholders — Ikatanbina Sdn Bhd (45.49%), Bee Kuan Ong (19.59%), Fields Equity Management Ltd (19.59%) and En Primeurs Sdn Bhd (7.33%) show that they control 92% of Plenitude. This leaves a free float of just 8%.

The analyst, who maintains a buy call on the counter, said the company's dividend payouts had picked up in recent years, and that could have made the stock more attractive to yield seekers.

Dividends for calendar years 2009, 2008 and 2007 totaled 14 sen, 13.5 sen and 11.5 sen, respectively. They were much higher than the payouts for 2006 and 2005 of 7.5 sen and 5.5 sen per share, respectively.

At Wednesday's closing price, the stock's historical dividend yield stands at 3.66%. But when its shares were trading at the RM3 level in the past few months, gross yield then was an attractive 4.67%.

The stock is also trading 26% below its net assets per share of RM5.16 as at end-March.

A glance at its latest third results for the nine months ended March 31, 2010 also showed decent earnings. The company earned net profit of RM56.59 million, up 4.6% year-on-year, on the back of revenue totaling RM242.13 million for the nine-month period.  Earnings per share was 41.9 sen.  

The run-up in share price of the tightly held stock comes with increased trading volume. Last week's average daily trading volume of 265,140 shares was 10 times more than the 25,540 shares per day average in the week ended July 9. Average daily trading volume for the past three trading days was 93,967 shares.

The analyst said the latest run-up in shares did not come with any new corporate development.

The latest corporate development announced by the company was on May 10, when it said its wholly owned subsidiary Plenitude Bayu Sdn Bhd had signed a sale and purchase agreement (SPA) worth RM45 million with Geotrade Sdn Bhd to buy about 165,000 sq m of land in Batu Ferringhi, Penang, at RM25 psf.

It had said that the acquisition was strategic as it allowed Plenitude to tap on the success of the group's Bayu Ferringhi project and that the transaction would be completed within three months.

According to its latest annual report, Plenitude had a total landbank in excess of 1,600 acres, located largely in Johor, Penang and Sepang in Selangor.
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