$KSENG / 3476 (KECK SENG (MALAYSIA) BERHAD): An Understated Company with High-Value Assets

KSENG is a Malaysia-based company primarily engaged in palm oil cultivation and manufacturing. Additionally, it is involved in property development, investment, and ownership of hotels and resorts. The company generates stable income every quarter, except during the pandemic when it suffered losses. KSENG is known for its conservative approach, with minimal corporate exercises despite having a net cash position of RM1.11 billion according to its FY23 annual report. The dividend yield is also low at just 2.49%, which has led to a lack of investor interest. However, this could present an opportunity for value investors.

According to the FY23 annual report, besides the RM1.11 billion in net cash (about RM3.06 per share), KSENG has significant property holdings, particularly in Johor. The land in Johor has appreciated considerably due to developments like JS-SEZ and data centers. KSENG owns approximately 8,000 acres of land in Johor, with the carrying value mostly recorded in the 1980s. The company’s NTA is around RM7.77, but the actual value is likely higher as there has been no land revaluation for decades. Additionally, KSENG owns properties in KL and hotels in the US and Canada, which also haven't been revalued. Thus, the company’s net asset value is likely far above the stated NTA. Based on estimates, the Johor land alone could bring billions of ringgit in returns to KSENG over the next decades. The final question is how management plans to reward shareholders?