IWCITY (1589) - IWCITY intrinsic value


The Roller Coaster IWCITY

This IWCITY is kind of interesting...I believe everyone can recollect all these UPs and DOWNs stories, quite recently we have seen all these breaking news of IWCITY

  • merger with IWH
  • confusion of IWH merger details (whether it includes Bandar Malaysia)
  • losing on Bandar Malaysia
  • And now calling off merger with IWH...

Definitely one of the favourites for all short term traders!

However, sorry for all traders, I do not have much to offer today. 
What I'm interested today is to take a step back and figure out the real value of IWCITY.

1) Asset Play - Purely based on land bank value

1052 acre landbank in Johor
1 acre = 43,560 sqft
1000 acres = 43.56 million sqft
With a conservative number - say 50 ringgit psf, 1000 acre = 2,178 million

Total shares = 840m

Per share = 2,178/840 = 2.59

If it takes 1 year to realize this value (selling out all the land bank)
Aggressive discount rate 10%
It is worth rm2.33 (2.56 / 1.1)

If it takes 2 years to realize
It is worth rm2.12 (2.33/1.11)

If it takes 3 years to realize
It is worth rm1.92 (2.12/1.11)

Note... the above is purely based on very very conservative number.
Rounding off to 1000 acre for simple calculation sake, using RM 50 per square ft price despite many land bank are very strategic including the one sold to Greenland.

Disposal of 127.92 ACRES land in plentong to Greenland itself is valued at RM 2,373,079,016 . What is the PSF of the land? 
127.92 acres = 5,572,195 sqft

RM 426 per square foot !!

Speaking of Greenland deal

2) Greenland 127.92 Acres deal (~ 13% of the landbank)

how much cash will IWCITY pocket?

Tracing back all the way to the original announcement for the details

Extract from page 11 of the proposal

Upon completion of the Proposed Land Disposal, it is expected that the IWCity Group will recognise a gain of approximately RM1,204 million (after taxation) or approximately RM1.80 per ordinary share of RM0.50 each in IWCity (“Share” or “IWCity Share”). Furthermore, the Proposed Land Disposal is expected to result in a net cash inflow to IWCity Group which is intended to primarily be utilised for land improvement worth

In Summary

Price is what you pay, Value is what you get
Something for value investors to ponder about the RM1.50 offer that is coming to IWCITY shareholders. 

This is not a buy or sell call.
Please read the disclaimer on the right side of the blog