This article first appeared in The Edge Malaysia Weekly on November 7, 2022 - November 13, 2022

YNH Property Bhd’s stock has gained more than 52% since early March this year and hit a multi-year high of RM4.09 on Oct 21. The run in the stock has been a steady one, and in stark contrast to the Bursa Malaysia Property Index, the benchmark for property development companies, which slumped to 599.99 points on Oct 21, its lowest in almost two years.

Against this backdrop, it is not surprising that YNH has bagged the top prize for highest shareholder returns for three years for property development companies with a market capitalisation of below RM3 billion — its second win after beating its sectoral peers last year. Shareholder returns from end-March 2019 to end-March 2022 reflect a 32.9% compound annual growth rate.

To put things in perspective, YNH’s stock was trading at RM1.18 at end-March 2019. It gained close to 125% to RM2.65 at end-March 2020, and 6% to RM2.81 at end-March 2021, before easing just under 2% to RM2.76 by end-March this year.

For FY2021 ended December, YNH registered net profits of RM21.25 million on the back of RM231.28 million in revenue. In FY2020, it chalked up net profits of RM6.8 million from RM263.13 million in turnover.

Nevertheless, the current financial year has not started out well for YNH. For the six months ended June, the company suffered a net loss of RM7.52 million from RM106.32 million in revenue.

As at end-June this year, YNH had cash and bank balances of RM51.07 million. On the other side of the balance sheet, it had short-term borrowings of RM299.95 million and long-term liabilities of RM319.94 million. Retained earnings stood at RM317.26 million.

In a commentary on its prospects, YNH says, “The local and global economic climate remains challenging due to the uncertainties caused by the Covid-19 pandemic. The group’s project progress as well as its hospitality arm are affected by the pandemic.

“The stimulus package(s) announced by the government, including the reduction of overnight policy rates and re-introduction of house ownership campaigns will make homeownership more affordable. As such, the board is cautiously optimistic that demand for property will be sustainable, given the strategic location and correct pricing of our properties.”

YNH’s property projects are promising. In January last year, the company undertook a soft launch of Solasta Dutamas, a high-end residential development project in Mont’Kiara, Kuala Lumpur, with a gross development value (GDV) of RM750 million. The project comprises 1,159 units and is slated to contribute positively to the group for the next three financial years.

YNH also has a three-acre tract of land in Kuala Lumpur’s Golden Triangle area, with a wide frontage of 320ft along Jalan Sultan Ismail. It plans to build its group corporate headquarters, Menara YNH, on this land. YNH has already obtained approvals for a development order for this project, comprising an office tower and a shopping mall. It will have a GDV of RM2.1 billion.

In addition, the company has inked joint-venture agreements for the development of parcels of land with RM1.8 billion in GDV in Mont’Kiara in Kuala Lumpur; Ipoh and Seri Manjung, which should contribute positively to earnings for the next 15 to 20 years.

YNH also has a 95-acre tract of land next to Genting Highlands Resort that it acquired in 2008 for RM16.05 million. It is planning to build bungalows, condominiums and retail outlets, among others, for both local and foreign investors. The estimated GDV for this development is RM1.96 billion and it is expected to contribute to the group’s earnings for the next 20 years.

Charting the direction of YNH are brothers Datuk Yu Kuan Huat, its managing director, and Datuk Dr Yu Kuan Chon, its chairman and executive director. Collectively, they own 32.58% of YNH.

Kuan Chon is also a 24.42% shareholder and non-executive chairman of Rapid Synergy Bhd, a company that undertakes property investment and the manufacturing of high precision integrated circuit moulds. Rapid Synergy had a market capitalisation of close to RM1.6 billion at the time of writing, close to YNH’s market capitalisation, which had breached the RM2 billion mark after the run in its share price.

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