EURO (7208) - Euro - Assembling Up

EURO (7208) - Euro - Assembling Up

Euro Holdings Berhad (Euro - 7208) which had caught investor alert during 2014 could be looking into some action soon after it remained on a low profile for more than 10 months after it's bonus issue.

To recap, Euro was primarily dealing with the manufacturing and marketing of furniture and office fittings. However, due to the emergence of new shareholder and director, Dato Sri Choong Yuen Keong, he had bring together with him more than 20 years of property development and construction experience, which is readily to put Euro in becoming a property developer.

While it had been known that Beverly Heights Properties Sdn Bhd is held by Dato Sri Choong Yuen Keong and his brother, Dato Tong Yun Mong, there had been much speculation on the development of the land which will be closely linked with Euro in the future.

With 30 acres of freehold land at the north east side of Penang which include 19 acres from the Pepper Estate, the prime land is overseeing a beautiful sea view from from a high altitude.

Since the prime land is held under Beverly Heights Properties Sdn Bhd, which is not a subsidiary of Euro, we will be looking at what are the possible option of this potential mind blowing project with huge GDV going to benefit Euro in a whole? To give a background, Beverly Heights Properties Sdn Bhd had in 2013 signed a JV with Oxley Holdings Limited (Singapore Developer). The JV will see Oxley holding absolute and exclusive power and right in the development of the land owned by Beverly Heights Properties Sdn Bhd. Oxley will be entitled to 70% while Euro 30%.

According to an experienced analyst who is familiar with such scenario, the highest possible chance for Euro in order to monetize from the development is to see Euro forming a JV with Oxley Star to the development. This will then replicate the form of joint venture structure liken between Ewein, Zenith and BUCG. The trio consist of mixed development project and infrastructural development from underwater sea tunnel to City of Dreams in Penang with different joint venture structure in between the entity. For Euro to be able to ride along the tide of Oxley will be a great opportunity.

However, due to the JV agreement is still being conditional, there are still chances of the agreement being terminated. If this happen, chances of the land being injected into Euro will be very high as Euro can easily raise fund from the public to make acquirement. Should that happen, Euro can either develop it on their own, or JV with local player such as Ecoworld, E&O or SPSetia for the 30 acre of land.

Currently, Euro will focus on it's first maiden foray, a low density development project at Damai Perdana, Cheras. The project named Vista Damai will see 322 units of freehold condominium at 4 acres of land.

Albeit the current weaker sentiment in the property arena, Euro had been lingering at a lowly region of 24 cents for the past 10 months. However, the interesting part of Euro will be it's foreseeable future corporate exercise and potential development.

After reducing it's par value to RM 0.10, it is foreseeable that Euro will be looking to see 1 round of fund raising, either through SIS (share issuance scheme to director) or Private Placement. Take private placement for an example, for a share base of 243 million shares, raising approximately RM 10 million through 10% placement (24.3 million shares) will also interpret to a pricing of RM 0.40 for private placement.

At the current pricing, Euro can be considered attractive. We expect Euro to do a revaluation of it's land and asset in the coming days in order to reflect the true value. Euro would have the potential to revisit back to RM 0.30, considering a considerable accumulation made back in November 2015.

Bone TP : RM 0.30

EUROSP (7094) - Euro - Assembling UpEURO (7208) - Euro - Assembling Up