New Straits Times, 4 October 2014 - Kenanga keeps 'market - perform' on Tropicana

04 October 2014

Kenanga keeps 'market-perform' on Tropicana KENANGA, research says Tropicana Corp Bhd's disposal of its RM37.6 million land in Selangor, is part of the group's degearing strategy. "Tropicana entered into a sale and purchase agreement with Mediaraya Sdn Bhd for the disposal of a piece of freehold land measuring approximately 0.98ha in Subang Jaya for a total cash consideration of RM37.6 million. "The deal does not surprise us as it is part of a degearing exercise to strengthen its balance sheet as the group has quite a large choice of land banks in its books. "While that particular piece of land's net book value stands at RM18.6 million, Tropicana is only expecting a net gain of RM3.7 million from the disposal, after net tax and payables due to some development cost incurred on that land previously" said Kenanga in its note yesterday. The research house said to date, the group has sold RM956.9 million worth of land banks including in Canal City, Jalan Bukit Bintang and Subang Jaya. Kenanga said Tropicana's management remains focused on their de-gearing exercise in which they are still actively looking to dispose of non-core assets like malls and office towers. "We are keeping our 'market-perform' call on Tropicana but have lowered our target price to RM1.28 from RM1.40" said the research house..