DNP profit forecast to leap on good project prospects

High-End property developer DNP Holdings Bhd, which could be rebranded into Wing Tai Malaysia in the near future, is poised for a quantum leap in profits.

For the year ended June 30 2009, DNP posted a net profit of RM14 million, but DBS Group Research forecast net profit could soar to RM114 million by the 2012 financial year.

For the year ending June 2010 and 2011, DBS forecast a net profit of RM51 million and RM78 million respecitively.

DNP is 54 per cent owned by Wing Tai Holding Ltd, a Singapore public-listed company which has created a niche reputation as one of the island state's top high-end residential developers.
DNP's second largest shareholder is former banker Chua Ma Yu, who owns 2.83 per cent of the company as at end-September last year.

The report said DNP has been marketing its KL high-end segment under the umbrella of Wing Tai Asia, to help ride on its parent's strong brand name.

"We do not discount the possibility of DNP being rebranded in the near future," Mei Hui Yee, an analyst with DBS wrote in a report initiating coverage on the residential developer with a price target of RM2.60 a share.

"We conservatively expect DNP's earnings to leapfrog by 3.7 times over the next three years. If all launches go ahead as planned, there could be a further 40 per cent upside to our earnings estimate," Mei wrote in the report.

DNP has about RM1.5 billion of upcoming high-end launches around Kuala Lumpur's Golden Triangle over the next few months.

Among its forthcoming launch is the Verticas Residensi at Bukit Ceylon, which has a gross development value (GDV) of RM726 million. The project comprises 423 condo units priced at a minimum of RM1.2 million a unit.

"We understand 64 per cent of the 70 units opened to registrants have been sold to date (within just one month) despite the price tag and ahead of management's expectations," Mei wrote in the report.

DNP is also expected to launch by year-end a high-end condominium project that comprises 25 units priced at RM3.5 million a unit. The condos have a built-up area of between 3,000-3,500 sq ft.

It is also expected to launch 197 units of luxury condos just opposite the Petronas Twin Towers by next year. The project is estimated to have a GDV of RM703 million.

By Business Times (by Francis Fernandez)