Looking Back At Berjaya Land: Part I

It's great fun to read the chain of news and events following a stock over the years.

No joke.

Take the Berjaya Land story.

Let me say this again. Anyone who had purchased this stock early in 2007, would have been laughing all the way to the bank by end Dec 2007.

It was a bull market and Berjaya Land was simply a winner.

Oct 17th 2007, I wrote on Berjaya Land: Berjaya Land Is A Growth Story?

I questioned the growth story mentioned in the local papers. It featured ECM Libra incredible declaration that Berjaya Land was a growth story.

I questioned the claim and in the blog posting, I loaded the picture of the chart depicting Berjaya Land past earnings record and it was crystal clear for me that it was not a growth stock!

As per the table showed in the article, Berjaya Land Is A Growth Story?, one would have noted that ECM Libra DID NOT bother to mention what Berjaya Land earned for 2003 and 2004. Coming from a research house, I was amazed that ECM Libra did not bother to show the bare minimum of at least a five year track record. How could one declare a growth story based on a three-year track record?

Well Berjaya Land earned 134 million in 2003 and only 94 million in 2004 and if I lined these facts up, Berjaya Land's 5 year track record would had looked like this.

In 2003, it earned 134 million
In 2004, it earned 94 million.
In 2005, it earned 67.5 million
In 2006, it earned 89.1 million.
In 2007, it earned 32.3 million!

Would one declare this as a growth stock? The earnings DECLINED from 134 million in 2003 to only 67.5 million in 2005.

Anyway Berjaya Land closed at 3.32 on Oct 17th 2007.

Now I would note the sale of KL Plaza by Berjaya Land in Aug 2007. BLand sells KL Plaza for RM471m and of course Berjaya Land places out RM170m ICULS to UBS, Goldman Sachs (disposal would would result in a gain of about RM340 million )

And other research houses started to jump on to the bandwagon. Here is a snippet from an article on the EdgeDaily (url is broken since the Edge has changed server)

• 19-10-2007: BLand ripe for re-rating
  
  BERJAYA Land Bhd (BLand) deserves a re-rating based on its venture into Vietnam, which is currently enjoying a property boom on the back of rapid urbanisation and strong average gross domestic product growth of 7.2% over the last decade, according to SJ Securities Sdn Bhd.
  
  “In Vietnam, the current demand for property far outstrips supply. Thus, the group’s move into Vietnam to capitalise on this opportunity is indeed timely,” said the research house.
  
  In a research note yesterday, it placed an Overweight call on the stock at RM3.32 and expected to re-rate its realised net asset value (RNAV) valuation to RM10.16 per share based on a two-stage valuation of BLand’s local and overseas ventures.
  
  BLand is the first Malaysian com-pany to be granted with investment licence to undertake mixed development property project in Hanoi — a joint venture with a total gross development value (GDV) of RM1.7 billion over five years....

A RNAV valuation of 10.16?? LOL! Mind you that on 3rd January 2007, Berjaya Land was only trading at 70 sen (!) and at that moment of time when SJ Securities was looking at Berjaya Land trading at 3.32!

Huge news continued to flow for Berjaya Land. BLand, Jeju to build US$500m complex (a rm1.7 billion project in South Korea!)

31st Oct 2007, it was Kenanga's turn to blow the trumpet : BLand sees growth in property sector and Kenanga gave Berjaya Land a target of 7.61. The small little chart on that Star article is reproduced.

See how Berjaya Land was only 0.70 sen at the start of the year? See how ot was 4.30 on Oct 2007 (up an incredible 514.3%!)

There was no stopping Berjaya Land.

November 14th 2007. BLand Purchases luxury hotel in Vietnam from Tradewinds ( Deal was worth some US75 million or 253.3 million ringgit)

And all these while, loan stocks were converted. Shares were high and it was a good reason to convert them into ordinary shares. ( Here is one such announcement of many posted on Bursa ( Bbjland conversion ))

And Berjaya Land continued to hog the limelight. In December 2007, Berjaya Land to buy Faber Labuan for RM226.5m and BLand aims big in Vietnam property sector and 13-12-2007: BLand in RM8.4b Vietnam JV project

• 13-12-2007: BLand in RM8.4b Vietnam JV project
  By Gan Yen Kuan
  
  HANOI: Berjaya Land Bhd (BLand) has teamed up with Hanoi Electronics Corporation (Hanel) to undertake a US$2.5 billion (RM8.4 billion) integrated residential, commercial and industrial township project in Long Bien district, Hanoi.
  
  The latest project increases the total gross development value (GDV) of BLand’s projects in Vietnam to about RM40 billion, said Berjaya Corporation Bhd (BCorp) chairman and chief executive officer Tan Sri Vincent Tan Chee Yioun.
  
  BCorp, which is the parent of BLand, signed the agreement of cooperation with Hanel here yesterday. The joint-venture company Berjaya-Hanel Co Ltd is acquiring 405 ha of land from Hanel for the township project...

17th December, Berjaya Land's Quarterly rpt on consolidated results for the financial period ended 31/10/2007

The Edge quickly trumps on Berjaya Land 'success': Berjaya Land chalks upRM325.4m net profit in 2Q.

• KUALA LUMPUR: Berjaya Land Bhd’s (BLand) net profit soared to RM325.4 million in its second quarter (2Q) ended Oct 31, 2007, compared with RM8.6 million a year earlier, after it registered exceptional gains of RM339.2 million.
  
  Announcing its 2Q results yesterday, BLand said revenue for the quarter increased 44% to RM175.6 million due to higher sales in its property development business, in spite of lower revenue recorded from its hotels and resorts division, which completed the disposal of Berjaya Le Morne Beach Resort & Casino, Mauritius and Berjaya Mahe Beach, Seychelles last August.
  
  The group said it registered the exceptional gains from the placement of 170 million 5% BLand irredeemable convertible unsecured loan stocks (ICULS), the disposal of the hotels (gain of RM26.7 million) and the disposal of 100 million Berjaya Corporation Bhd ICULS (gain of RM12.9 million)....

A profit of 325.4 million boosted by exceptional gain of 339.2 million? ... ? :p

And folks from SJ Securities continued to be bullish about Berjaya Land despite Berjaya Land now trading at 5.60 on 21 Dec 2007. 21-12-2007: Better earnings outlook for BLand

• SJ SECURITIES has revised upwards its estimation of Berjaya Land Bhd’s (BLand) financial year ending April 30, 2008 (FY08) results and maintained an overweight call at RM5.60 on the property developer’s stock.
  
  The research house said its revision was based on exceptional gains reported in BLand’s second quarter ended Oct 31, 2007 (2QFY08) results.
  
  It said the gains comprised RM339.2 million from the placement of 170 million 5% BLand irredeemable convertible unsecured loan stocks (ICULS), RM26.7 million from the disposal of the Berjaya Le Morne Beach Resort & Casino in Mauritius and the Berjaya Mahe Beach Resort in Seychelles in August and RM12.9 million from the disposal of 100 million ICULS of parent company, Berjaya Corporation Bhd.
  
  “We are also revising our fair value for BLand to RM6.44, after imputing the contribution of its first Hanoi project, Thach Ban New City, into our valuation. We believe the revision is timely as our recent visit to Vietnam convinces us that the group is on track to launch this project by 1Q of 2008,” it said.

Then came January 25th 2008. Berjaya Lands announces it will abort its Vietnam project and I blogged on it the next day: What's to happen to Berjaya Land's Growth Story?

• BERJAYA Land Bhd's plans of developing residential and commercial properties in Vietnam's Nhon Trach district has fallen through.
  
  In an announcement to Bursa Malaysia yesterday, Berjaya Land said it will not proceed with its co-development plans with Tin Nghia Co Ltd, a leading state-owned enterprise in Dong Nai.
  
  The property development is inclusive of its transportation and infrastructure network.
  
  "The board wishes to inform that after much discussion and consideration, the parties involved have decided not to proceed with the project based on the findings of the feasibility study report," Berjaya Land said.

I was amazed. Despite this setback in Vietnam, the company came out strongly defending the company's growth potential.

See the following two articles Major projects set to push BLand ahead and Group has projects worth RM60bil in Asia-Pacific.

On the 29th January, Kenanga and SJ were both unfazed and I wrote Everything's Ok for Berjaya Land, so says ...

What were to happen to Berjaya Land???

To be continued...

Looking Back At Berjaya Land: Part II