SINGAPORE (Aug 24): NRA Capital has given Astaka Holdings an “overweight” rating with a high-average return and high-risk qualification.
The stock has been valued at 13 cents, which represents a 56% discount to the estimated Revalued Net Asset Value (RNAV) of 29.6 cents.
In a Wednesday report, analyst Liu Jinshu says he expects the group to show both positive and growing revenue and profits following its change of accounting policy, which will allow an estimated RM1.1 billion of revenue – or about 20% of the group’s project gross development value (GDV) – to be recognised.
He forecasts Astaka to generate revenue of RM263.7 million in FY17, and RM411 million in FY18.
The Catalist-listed real estate developer recently in June topped off Phase 1 of its One Bukit Senyum development, which is now undergoing works such as interior décor as well as mechanical and engineering works.
See: Astaka tops off twin towers at One Bukit Senyum in Johor
While One Bukit Senyum is touted as an iconic development with the status as Southeast Asia’s tallest residential towers, Liu is cognisant of the risk of competition from other developments in Johor, as well as the risk of delayed construction progress due to inadequate funding for Phase 2.
The proposed MRT rail link between Singapore and Johor would present a potential catalyst for the stock, he adds, as increased traffic flow would benefit One Bukit Senyum, which is located within walking distance from the Quarantine Complex (CIQ) at Johor’s causeway to Singapore.
More importantly, he emphasises that Astaka is “not just a ‘single-project’ company” as it has, over the last 12 months or less, also acquired, launched and partially sold a 3,884 housing unit project, Bukit Pelali, which is located “right at the mouth” of Petronas’ integrated petroleum complex in Johor, Malaysia.
The 363-acre township has attracted investors including Saudi Armaco and is expected to provide jobs for up to 70,000 when its operations commence in 2019, which has led the analyst to believe the project will be well taken up in the near-term.
“On balance, we appreciate the business progress that Astaka has achieved since its listing in Nov 2015; albeit offset by broader market risks,” concludes Liu.
Astaka is projected by NRA to deliver a return-on-equity (ROE) of 18%, and is currently trading 4.18 times book.
As at 9.46am, shares of Astaka are trading flat at 9.2 cents.
