E&O ... Aug10

Sources say its major shareholders are believed to be considering a privatization of the property develop. They are talking to banks to finance the exercise.

Its MD Datuk Terry Tham is the single largest shareholder in E&O with a combined direct and indirect stakes of 123.31 million shares or some 16% of the company’s issued and paid up share capital of 773.61 million shares. Singapore based GKG Investment Holdings Pte Ltd is the second largest shareholder in E&O with a total interest of 94.49 million shares or about 12% of the company.

E&O has been actively buying back its shares since Feb 2010 till July 2010. GKG Investment Holdings have also been buying the shares.

The most common valuation methods for real estate firms are PER, price to book value and the revalued net asset value methods.

It posted a net profit of rm43.83 million in 4Q2010 ended March 31 compared with a net loss of rm44.21 million a year earlier, help mainly by a RM35.11 million gain from the disposal of an investment property. Revenue fell 9.7% to rm73.71 million from rm81.65 million. Cumulative full year net profit stood at rm70.89 million of 6.7 sen a share.

As at March 31, E&O had a cash pile of rm559 million and borrowings of rm831 million. Excluding its loan stocks, net debt stood at RM272 million with a net gearing ratio of 26%. Net assets per share stood at rm1.25.

Going forward, E&O earnings are expected to improve as its real estate launches in FY2010 start to contribute to the developer’s financials in FY2011 and FY2012. This is in addition to the developer’s estimated rm540 million worth of unbilled sales.

Unbilled sales refer to the value of properties sold that have yet to be recognized in a developer’s book. E&O’s estimated rm2.5 billion in penang and the Klang Valley, besides the expansion of the company’s hotels.

It has a current RNAV estimate of rm2.07 a share for E&O. The inclusion of the additional 740 acres under the Seri Tanjung Pinang project in Penang is expected to add another RM1.58 a share to the company’s RNAV, resulting in a potential RNAV of rm3.65 apiece.