SINGAPORE (Jan 19): Regal International Group, the property developer from Sarawak, appears to have a lot going for it right now.
Earlier in January, the group announced it signed a conditional off-take agreement with MyAngkasa Bina (Angkasa) to market the residential units at Airtrollis Phase 3.
That means, Angkasa will market and sell the 276 residential units of the development on Regal’s behalf, or purchase the unsold units for up to RM 90 million.
At the same time, Regal’s subsidiary successfully issued 8% redeemable preference shares with a 3.5 year tenure and raised 15 million ringgit from Koperasi Jayadiri Malaysia (Kojadi).
According to NRA Capital’s analyst Liu Jinshu, the Angkara agreement provides the group with the funds to construct the project and added that the RM 90 million ($28.8 million) sale price was above his estimates.
The preference shares issue, which has been personally guaranteed by two of Regal’s executive directors, also helps to reduce Regal’s balance sheet risk and improve its working capital position.
Liu believes the dealings with Angkasa, a subsidiary of an apex cooperative with 7.5 million members, and Kojadi, a cooperative with RM 156 million in assets and 62,000 members, are a sign that Regal could continue to seek out other similar deals with other large cooperatives.
Furthermore, the group’s share price has yet to reflect the potential upside from the group’s development projects. Liu estimates that Regal has a gross development value of RM 1.5 billion and values the group at 31.5 cents per share or $63 million. Yet, the group currently trades at a market capitalisation of just $29 million.
NRA has an “overweight” recommendation on Regal.
Shares in Regal are trading at 14.9 cents on Thursday.