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Tue, 29 July 2014 17:40:40
A hot pick among local punters, land and property stocks are booming. But is there value in the shares?
09 Aug, 2004 00:00:00
The Land & Property sectors has been a top favourite of local punters, but stockbrokers LOLC Securities says investors should take a closer look at the valuation of these shares.
The Land & Property sectors has been a top favourite of local punters, but stockbrokers LOLC Securities says investors should take a closer look at the valuation of these shares.

Associated Property Development Limited

The company owns a significant extent of prime property at the Union Place, Colombo 02, that has been last valued in 1987, at Rs. 35.95 mn. LOLC Securities is of the opinion that the current value of this property is around Rs. 150 mn, taking account of the rate at which property values have been appreciating in this locality of the Colombo city.

The firm's estimated book value at Rs. 49.50, is at a significant premium to the current market price of Rs. 34.50. "We are of the opinion that an upward re-rating of the counter is warranted," says analysts Vajira Premawardhana and Shamlee Hasheem.

C T Land Development Limited

The company owns and operates the Majestic City, a premier shopping complex situated in Colombo 04. The last valuation was carried out in 1996 and the book value stood at Rs. 626.62 mn as at the last balance sheet date.

Considering the location of the property and the increasing popularity of high street shopping malls, LOLC puts the current valuation at around Rs. 1,879 mn. After incorporating this new valuation, the estimated book value of the share can be as high as Rs. 38.99, once again leaving room for upward price movement as the share is currently trading at Rs. 20.25.

Ceylinco Seylan Developments Limited 

The company owns and also carries out the administration and maintenance of the Ceylinco Seylan Towers. The East Tower, the largest of the two with around 101,000 sq. ft. is rented out to Seylan Bank and the 16 luxury apartments in the West Tower which has an cumulative floor space of about 74,000 sq. ft. is rented to expatriates.

The last revaluation was carried out in 1999 and the balance sheet value is Rs. 1,233 mn. The stockbrokers believes that this quite accurately represents the market value of this property. The book value per share based on the property value is Rs. 14.30 and the share is traded at Rs. 9.75.

Colombo Land and Development Limited

Owners of the Colpetty based Liberty Plaza mall, the property was last revalued at 1994 and has a book value of Rs. 562.49 mn.

The current market value is estimated at around Rs. 1,200 mn. Based on these valuations the book value of the share would be Rs. 8.50 which is in fact below the market price of Rs. 8.50. Provided the market properly translates this information, a drastic price movement is highly unlikely.

Company Market Price Rs. L&B Valuation date BV of L& B Rs.
Associated Property Development 34.50 21-Mar-87 35.946
C T Land & Development

20.25

31-Dec-96

626.62

Ceylinco Seylan Developments

9.75

15-Jul-99

1,232.99

Colombo Land & Development

8.50

31-Dec-94

562.49

Commercial Development

32.25

31-Mar-94

172.36

East West Properties

21.25

N/A

441.40

Equity One

28.75

31-Mar-04

350.07

Equity Two

12.25

31-Mar-04

319.57

Overseas Reality (Ceylon)

10.75

30-Jun-03

10,260.22

Property Developments

26.00

N/A

634.91

Serendib Land

120.25

13-Jan-92

49.35

The Cargo Boat Development

39.00

N/A

36.152

York Arcade Holdings  13.00 N/A 118.31

Commercial Development Company Limited

The firm owns and operates Commercial House, the headoffice of Commercial Bank of Ceylon.

Situated in Colombo 01, the land and buildings were last valued in 1994 and has a book value of Rs. 172.36 mn. LOLC estimates the current valuation at around Rs. 680 mn. After incorporating this estimation, the expected book value per share would be Rs. 63.32 which is well above the current market price of Rs. 32.25 thus revealing the potential for future increase in market price.

East West Properties Limited

The Nawam Mawatha property carries a book value of Rs. 441 mn, which LOLC believes is a fair representation of the market value of the property.

The share has a net asset value of Rs. 17.96 and it is traded at a premium to the book value at Rs. 21.25. Purely based on the book value of shares, the stock shows very little potential for increase in price.

Equity One Limited

The firm owns and operates the Citibank Building in Colombo 03, which has a floor area of around 50,000 sq. ft.

The property was revalued this year, with a book value of Rs. 350 mn.

The market price of the share is Rs. 28.75 and the net asset value of the share is around Rs. 62.87 and it is clear that the share is traded at a massive discount to the book value. Generally the market prices of this sector is driven by the net asset value, hence an upward revision of the counter is expected.

Equity Two Limited

With 45,000 sq. ft. of property in Colombo 01 under its umbrella, Equity Two revalued its property this year and now carries a Rs. 319.57 mn book value.

When compared to the net asset value of Rs. 48.15, the market price of the share is only Rs. 12.25. Accordingly an upward revisal of the share price can be expected once the investors have factored in the net book value of the company.

Overseas Realty (Ceylon) Limited

Owners of Colombo's prominent landmark, the Twin Towers (also known as World Trade Center), the property was last valued in 2003 and carries a book value of Rs. 10,260 mn.

LOLC is of the opinion that this is very much closer to the current market value of this property. The share has a market price of Rs. 10.75 which is well above the NAV of Rs. 7.38 and on this basis LOLC sees very little potential for price increase provided the signals are correctly interpreted in the market.

Property Developments Limited

The owners of Bank of Ceylon's headoffice building, the firm carries a Rs. 634.91 mn book value. However, going by current trends, the property is worth around Rs. 2,600 mn. This valuation gives Rs. 46.88 book value per share, which is significantly above the current market price of Rs. 26.00.

Serendib Land Limited

Owners of Eagle Insurance Company's headoffice in Colombo 02, the property was previously valued at Rs. 49.35 mn in the year 1992. The property is currently worth about Rs. 350 mn, which puts the book valuation of each share at Rs. 350.00. The counter, presently carries a market valuation of Rs. 120.25.

The Cargo Boat Development Company Limited

The firm's Colombo 01 building carries a valuation of Rs. 36.15 mn in its books. LOLC estimates the current land to be worth around Rs. 225 mn. Based on this estimate the book value of the share would be Rs. 100.04, which is very much above the current market price of Rs. 39.00.

York Arcade Holdings Limited

The company owns a building in Colombo 01 which has a book value of Rs. 118.31 mn. LOLC estimate the land is worth around Rs. 320 mn. Based on the estimated valuation the book value of the share would be Rs. 26.99 which is above the current market price of Rs. 13.00.

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