Borneo Post, 20 September 2011 - Dijaya now rides on encouraging sales amidst private placement
Borneo Post, 20 September 2011
KUCHING: Dijaya Corporation Bhd (Dijaya) is currently in the midst of a private placement of new ordinary shares which is expected to result is robust performance and potential in the long term.
OSK Research Sdn Bhd (OSK Research) observed that the private placement would result in a short-term earnings dilution.
In the exercise, Dijaya would place 30 per cent of its issued capital to a still unidentified third party which was forecasted to be able to raise RM203.99 million for the financing of landbank acquisitions.
Dijaya, the developer of Tropicana Golf & Country Resort, showed massive potential as it surged forth with its aggressive land banking activities.
Dijaya acquired a total of 707 acres of landbank with a combined gross development value (GDV) of RM17 billion which would be laid out in stages over the next decade.
Apart from its home turf of Klang Valley, Dijaya had plans for developments in Johor, getting a piece of the action in Johor’s property market.
The Tropicana Danga Bay project – part of the Iskandar Malaysia development – had a total GDV of RM2.8 billion.
The research report also shed light on Dijaya’s other projects which were planned as a form of expansion due to the limited land back in the Klang Valley area.
Dijaya held landbanks in Cheras and Balakong with estimated GDVs of RM185 million and RM400 million respectively.
Its Tropicana Kajang six-year project was foreseen to benefit from the proposed MRT system that was to stretch from Kajang to Sungai Buloh.
Dijaya’s aggressive land banking activities gave little to no negative effects on its balance sheet as its return on equity (ROE) ranged between three per cent and seven per cent for the past three financial years.
OSK forecasted that Dijaya should be able to achieve five per cent to eight per cent ROE for the next three years. For the financial year of 2011, Dijaya was expected to launch some RM839 million worth of projects.
Driven by encouraging project sales riding on the steady and consistent growth of Malaysian property prices, Dijaya posted unbilled sales of RM450 million as at June 1, 2011.
OSK Research thus foresaw clear and visible earnings for Dijaya in the next two years.
OSK Research pegged a fair value of RM1.64 and a dividend yield of three per cent based on the company’s robust potential in the long term.