KUALA LUMPUR: PublicInvestment Bank (PIVB) Research has started coverage of TAHPS Group, one of the oldest companies publicly listed on Bursa Malaysia, boasting a rich history of more than 110 years.
It said on Monday the former plantation-based company is now a low-profile property developer focusing solely on its Bandar Bukit Puchong township.
The greatest attraction about the company is the low cost landbank it is sitting on, well-placed in a suburban area with good accessibility and huge potential development value.
“Due to the thin trading liquidity and a lackluster sales outlook in the near-term however, we see the company’s share price continuing to trade at a steep discount of more than 70% to our realised net asset value (RNAV) valuations.
“We are initiating coverage on TAHPS Group with a Neutral call and sum-of-parts based target price (TP) of RM7.37. Investors with very long term horizons may find this an attractive proposition however, given its deep value,” it said.
PublicInvest Research pointed out TAHPS, established since 1907, started as a rubber plantation company.
Originally founded by foreigners, the current owners’ emergence in the company occurred in 1965 through an injection of their estate land in Raub into the company.
In 1992, TAHPS ventured into property development via its units, The Ayer Hitam Development Sdn Bhd and Bukit Hitam Development Sdn Bhd, with projects focused primarily in Puchong.
Today, TAHPS is one of the largest owners of undeveloped land in the Puchong township with a remaining 610 acres in Bandar Bukit Puchong and Puchong Utama (a 15 min drive from Puchong city centre), placing it as a great proxy to the real estate exposure of this mature township development.
Attributed to the good connectivity and accessibilities via various major expressways, namely, SKVE, LDP, MEX, KESAS and NKVE, Puchong has transformed into a vibrant city with an estimated population of more than 400,000.
“As at 1QFY17, the Group is sitting on a cash pile of RM84mil with zero borrowings. The healthy balance sheet stands the company in good stead amid the lackluster conditions currently, giving it the ability to ride out the times without the worry of having to chase for sales numbers.
“More importantly, it also allows the company to make opportunistic acquisitions should they emerge, though we reckon the company is not in any hurry to either given the vast tract of land it can still develop.
“Despite being a small scale property developer, TAHPS’s gross profit margin ranges from 48%-74%, one of the highest in the industry thanks to its relatively low land holding cost of RM3-7 psf,” said PublicInvest Research.
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