DIJACOR (Article 2)

Listed since 1992, DIJACOR is a Klang Valley based property developer. Corporate tycoon Tan Sri Danny Tan Chee Sing is the main shareholder in the company. Management lies in the capable hands of managing director Tong Kien Onn and his team. Base on Chart 2, DIJACOR net profit quite consistent between RM30 million to RM50 million for the last 5 years. Meanwhile, it’s net asset per share increase steadily to RM 2.39 as at end of 2008. The land it owns in Tropicana and Damansara Indah are stated below current market value in its books value as reported by TheEdge analysis report on Dec 2007. If based on the current market values, the estimated DIJACOR’s RNAV at about RM4 per share – almost three times the current share price.

As at end of 2008, DIJACOR has unbilled sales of RM283 million and at end-September 2008, net cash and equivalents stood at RM26.6 million. Not many property developers have net cash on hand. Further more, between December 2007 and February 2008, the company acquired a total of 186.2 acres of
mainly agriculture land, but within or nearby established areas. The acquisitions include 26.4ha in Kajang,Selangor, for RM47.5 million (RM16.50 psf);
37.4ha in Jenjarom, near Klang for RM29.5million (RM7.25 psf) and 10.7ha. in Cheras for RM18.7 million (RM16 psf). With this, DIJACOR would have a total land bank of around 386.8ha.

There are 2 main projects which may be launched from mid-2009 to mid-2010, namely Tropicana Grande and Tropicana Avenue. Tropicana Grande was to consist of 241 units condominiums with large built-up space of 2,500-4,500 sq ft, located on 2.1ha. land. Tropicana Avenue was to comprise three blocks of nine- and 11-storey shop offices on 2.8ha. land. In the meantime, the company is busy completing its existing projects in Tropicana City and Tropicana Indah, as well as the shops in TSB Sungai Buloh. DIJACOR will also focus on selling the balance of its projects and inventory, such as those in completed projects like Casa Suites, Tropics Designer Suites and Villa Green.

Tropicana City Mall opened in December 2008 and the office tower will be
completed in mid-2009. This will provide a new source of recurring income
from 2009 onwards, with rental income of over RM20 million from the mall and
RM5 million from the tower.

Besides, DIJACOR also has an Indian joint-venture project which has no been finalize yet. However, the company has proposed three-for-four rights issue but has been delayed until Sept. 2009. Anyway, it is believe that the right issue will be eventually called off given weak market conditions and its strong balance sheet.

DIJACOR's shares are trading well below it’s book value of RM2.39 as at end of 2008, which is already severely understated. DIJACOR's shares are attractive for
longer-term investors. The company has a strong balance sheet, large prime
land bank acquired at low costs and the ability to ride through the downturn relatively well.



Note: Most of the contents of this article are refer to analysis reports from TheEdge.


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