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15 December - NWP (5025) NWP HOLDINGS BHD [UPDATE]

Stock code: 5025 NWP

Trade statistics [15 December, Tuesday]
15th Top Volume Counter – 104.8m
High 31sen, Closed 29sen

Key Investment Notes [UPDATE]

1) PROPERTY MAN

DS Nelson needs no introduction in the real estate scene. As founder and CEO of GS REALTY, he has established GS as the preferred partner of top Malaysian developers with a nationwide presence and one of the largest teams of property agents.

In year 2020, when the property sector is already at its bottom plus the Covid pandemic, GS succeeded in closing over RM7 billion worth of property sales. A quick check with the companies commission reveals that GS has been reporting revenues of over RM150m+ consistently over the past years, with the highest profit reported at close to RM10m.

Impressive numbers for an unlisted private co.

2) UNFINISHED BUSINESS

When DS Nelson was appointed Group CEO and director of NWP in end 2016, there was market chatter that a possible injection of the highly profitable real estate agency into NWP was in the works.

Also, DS Nelson have shared in many occasions that the reason he invested into NWP was to use the listed vehicle to take on new property development projects. Large projects that were more suited for a listed entity in terms of fund-raising and enhancing shareholders’ returns. 

It was a beautiful turnaround story for loss-making NWP, only to be hampered by board issues and shareholder tussle. DS Nelson was suspended but now he is back.

Back for real and back in action.

3) COMEBACK TIME

The focus of today’s report is to share some findings on the property aspect of NWP’s new growth phase, as stated by DS Nelson to the media over the last weekend.

Sources within the property industry have shared that DS Nelson is involved in a development project called ‘KL NORTH INDUSTRIAL HUB’. This is an industrial factory development project located in Rawang, with a GDV of RM500m.

The project consists of 430 units of superlink factories which are most in demand as the layout is versatile. Plus, its price point is fairly accessible at just over RM1m per industrial unit. Another comfort factor is that the project is surrounded by well-established names such as UMW Aerospace, Perodua Global Manufacturing, Tan Chong Motor etc.

In a nutshell, the RM500m can be translated into sales without much risk of an overhang.


 

4) SNEAK PEEK

The project is carried out by Hoong Li Development, of which DS Nelson is a Director of the company. The other 2 directors are said to be close aides of another much larger listed co in town.

A back-of-the-envelope calculation, assuming the RM500m is fully sold (sources reported it is 50% sold as of today, after being marketed for less than a year) and over a construction period of 3 years average for superlink factories, would give a progressive revenue recognition of RM150m+ per year, with a conservative nett profit assumption of RM10m-15m per year.

Compared to the current state of NWP with just a single-digit revenue per quarter with losses to bear, if the so-called “further announcements during 17th Dec EGM” mentioned by DS Nelson during last weekend’s interview has anything to do with this property development project, shareholders would have much to cheer for.

 

Summary

As shareholders and investors await the coming EGM on Thursday 17th December, pieces of information have emerged and links are being drawn to depict a comeback plan long overdue, since DS Nelson first invested into NWP.

Will market enthusiasm for NWP tomorrow top the trades done today, where it was the 15th top volume counter?

Positive factors:

  • Budget approved
  • Property sector recovery
  • Possible asset injection or other good news on 17Dec EGM

Would investors WAIT until the EGM is concluded by 17Dec to make an investment decision, or the signs are clear enough for them to DECIDE already?

Thank you.

Best regards,
Alpha7 Research

https://klse.i3investor.com/blogs/alpha7research/2020-12-15-story-h1538223402-15_December_NWP_UPDATE.jsp

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