PERAK CORPORATION BHD Simple Research Report

Shares Outstanding	100,000,000
Market Capitalisation (at RM3.30)	330,000,000
Total Assets	827,975,444
Total Liabilities	176,551,875
Net Asset Value	651,423,569
NAV per share	6.51
NAV (discounted ~30%)	4.56
Gross Margin - 5 YR. Avg.  Source - Reuters	63,090,000
Net Profit Margin - 5 YR. Avg. Source - Reuters	33,640,000

Value per Share Today

Total Cash (subject to >RM12m reserves/trust/pledge/etc): approx. RM158,618,895

The above does NOT include sale of Integrax Bhd shares recently completed at approx. RM150,310,000 completed on 17 April 2015.

Hence, Total Cash, after disposal of Integrax (which should be booked in the next quarterly report) should increase to approx. RM308,928,895 sufficient to settle all debts leaving each share with an estimated minimum worth per share of RM4.56. Duly note that Total Assets already encompasses mentioned Integrax stake, which upon sale, the proceeds is merely transformed into liquid cash plus additional profit earned from sale minus cost of investment.

[Perak Corp. shares NAV is discounted at 30%, taking into account probable value adjustments, suitable in calculating possible underpriced take over value]

In addition, 5 year income averages can be considered stable and high relative to servicing debt expenses and dividend payouts.

Business Nature

Perak Corp. Bhd (henceforth the company) is a property and investment holding company, which engages in real property development and provision of management services. It operates through the following segments: Infrastructure, Township Development, Hotel and Tourism, and Management Services and Others. The Infrastructure segment provides maritime services in respect of the development of an integrated privatized project and encompassing operations of multipurpose port facilities, operation and maintenance of a bulk terminal, sales and rental of port related land and other ancillary activities. The Township Development segment deals with the development of real property and ancillary services. The Hotel and Tourism segment focuses on hotelier and restaurateur activities. The Management Services and Others segment includes property investment and distribution, and provision of management services. The company was founded on January 11, 1991 and is headquartered in Ipoh, Malaysia. (Source: WSJ.com)

Note: The company has almost fully utilised its land banks (>94%) for Bandar Maju Jaya development and land banks from its port land. 

More land (1002.939 acres) is in the process (since 28/02/2012) of being acquired in exchange of debt owed to company. More info can be found in the company’s Annual Audited Accounts 2014 part 2, page 115-124; 
[http://www.bursamalaysia.com/market/listed-companies/company-announcements/4725485].

Future

In line with Perak Corp’s Township Development & Hotel and Tourism segments, a joint venture with Sanderson Group worth more than the entire Market Capitalisation(at RM3.30 per share) of Perak Corp is the RM450,000,000 project, estimated to be completed in 2016. This humongous project is known as MAPS or The Movie Animation Park Studios will include a Dreamworks-dedicated zone, featuring characters from animated movies such as Mr Peabody and Sherman, The Croods, Megamind and Casper the Friendly Ghost as reported by theStar on 30/3/2014 and subsequent articles.

Conclusion

This state linked company for years has been run with consistent income performance (and debt management) with number of shares outstanding unchanged and a steady trend of increasing NAV among the points bearing shareholder centricity. With the price paid per share, the value you receive far exceeds cost. Looking ahead, income stream from upcoming and ongoing operations should translate into the continuity in NAV growth (asset value) and sufficient cash for future dividend payouts which may increase with business prosperity to benefit shareholders, state and country.

As always, investment (a longer time frame) is recommended, trading is NOT recommended. There are much more elements to scrutinise in company valuation prior investing. All aspects analysed and mentioned is from more detailed analysis, simplified. It is opined Perak Corporation Bhd to be undervalued currently and a good long term investment should management maintain their rigour, past trends are followed, more land is strategically acquired and sold & MAPS is successfully launched. 

Until next time, happy investing.

[DISCLOSURE: 

The writer has interest in the company analysed.

[DISCLAIMER: Everything stated in this blog is purely the opinion of the writer and any decision taken should be based on sound judgement with risks fully born by the decision maker. The writer shall bear no responsibility for any losses due to adherence of advices blogged by the writer or any commenters.  Informational discrepancies are possible and will be corrected if any.]