DNP ...Nov09

High-end property developer - DNP HOLDINGS is expected to benefit from a demand in high-end properties said HWANGDBS VICKERS RESEARCH on Oct 7, 2009.

The research house said that DNP's ".... RM1.5 bil launch-ready projects around KLCC puts the Company in a good position to ride the recovery in the luxury property market, adding that the Company can leverage on its Singapore-listed parent WING TAI HOLDINGS' blue-chip status, strong brand name, and global marketing network .... High-end sales are picking up. 75 units of Verticas condos at Bukit Ceylon have been sold to date, with average selling price rising to RM950 to RM1,000 per sq ft (psf) from RM850 to RM900 psf in Jul 2009. Including Tower C, sold en-bloc earlier, take-up reached 45% without tapping into WING TAI's Singapore stronghold ....".

HWANGDBS said that 70% to 80% of buyers were locals. DNP's upcoming launches include U-Thant condos which has 25 units with averge selling prices of RM1,000 to RM1,200 currently. Meanwhile, its 197 units of KLCC luxury condo units with average selling prices of more than RM2,000 psf are scheduled to be launched in 2010. DNP also recently roped in TESCO to its acquisition of 15 acres of Seberang Prai township for RM35 psf.

LOOKING FOR LANDBANK
The Company is also on the lookout for new landbank in the Klang Valley. This would be supported by its strong balance sheet with only 9% net gearing said HWANGDBS. DNP's investment property at Ampang, 'Lanson Place Condo 8' which sits on a piece of 3-acre land, has redevelopment potential following the recent relaxation on density limit in the area. HWANGDBS VICKERS said the estimated sales value could reach about RM300m.

" .... We recently brought WING TAI and DNP on a roadshow to Singapore and Kuala Lumpur. WING TAI expects non-Singapore operations to expand to 40% of total assets over time, from 30% currently (Malaysia: 12%) .... Meanwhile, DNP will transform ala WING TAI into a niche high-end developer, with RM1.5 bil to RM1.8 bil worth of projects in KL and RM600m in Penang. We understand WING TAI might consider rebranding DNP to WING TAI MALAYSIA soon ...." it said.

DNP TO EXIT GARMENT-MAKING
The research house also said that DNP aimed to exit the garment manufacturing business within three years, while it continues to expand its retail arm that has provided steady earnings and cash flow. " .... Valuation is undemanding at 33% and 31% discount to average midcap developers' price to book value ratio (P/BV) and price to revised net asset value ratio (P/RNAV) multiples ...." adding that DNP is trading at only 0.7 time P/BV and 0.4 time P/RNAV, versus mid-cap sector average's 1.1 times and 0.6 time respectively, despite having one of the strongest earnings growth in the sector, with three-year compound annual growth rate of 67% ....".