Plenitude – paying for not being fearful?

[i4value]

I first invested in Plenitude Bhd in early 2007 at an average price of RM 1.54 per share. When the price began to rise in 2010, I sold off some of it at an average price of RM 3.79 per share.

When the price dropped to below RM 2.50 per share sometime in 2012/13, I bought additional shares. My average price was then RM 2.28 per share.

When the price rose to RM 3.20 in 2014, I did not sell as it was still below its intrinsic value. Unfortunately, that was the peak price. Plenitude today is trading at RM 1.14 per share compared to its NTA of RM 4.15 per share.

Warren Buffett once said that it is wise for investors “to be fearful when others are greedy and to be greedy only when others are fearful.”

I am not sure which category I fall into. Greed enabled me to buy in 2007 and make money. But I was not fearful enough in 2014 to sell and this led to my current situation.

But I have not given up hope on Plenitude. Plenitude has two major potential profit contributors – property development and hospitality.



Property development has been contributing to the bottom line, even in the 2020/21 pandemic years. With the opening of the economy, I expect the contribution to be better. The property development segment was the major contributor to the Group’s performance.

Plenitude started as a property developer but in 2001 diversified into the hospitality business. Today the hospitality business is the largest segment in terms of the Total Capital Employed.  But it was not profitable since 2013.

The hospitality segment’s poor performance was due to competitive pressures. The Group had refurbished and rebranded the hotels to address this. At the same time, it had also focused on efficiency to improve the margins.

There are signs that gross profit margins are improving but the jury is still out on whether revenue will improve. The hospitality business is a turnaround case. Because of its size, the creation of shareholders’ value will depend on a successful turnaround.

For more insights into Bursa companies go to “Are these outstanding stocks - what to consider? (Bursa Malaysia)”

[specuvestor]

Just my observation that I think Thailand has surpassed Malaysia in hospitality business past 10 years. Previously you can still argue about amenities, traffic, infrastructure, service, language etc

Malls and retail should still do ok. HKers are also keen to migrate to Malaysia

But hospitality industry wise Malaysia is lagging already

I first invested in Plenitude Bhd in early 2007 at an average price of RM 1.54 per share. When the price began to rise in 2010, I sold off some of it at an average price of RM 3.79 per share.

When the price dropped to below RM 2.50 per share sometime in 2012/13, I bought additional shares. My average price was then RM 2.28 per share.

When the price rose to RM 3.20 in 2014, I did not sell as it was still below its intrinsic value. Unfortunately, that was the peak price. Plenitude today is trading at RM 1.14 per share compared to its NTA of RM 4.15 per share.

Warren Buffett once said that it is wise for investors “to be fearful when others are greedy and to be greedy only when others are fearful.”

I am not sure which category I fall into. Greed enabled me to buy in 2007 and make money. But I was not fearful enough in 2014 to sell and this led to my current situation.

But I have not given up hope on Plenitude. Plenitude has two major potential profit contributors – property development and hospitality.



Property development has been contributing to the bottom line, even in the 2020/21 pandemic years. With the opening of the economy, I expect the contribution to be better. The property development segment was the major contributor to the Group’s performance.

Plenitude started as a property developer but in 2001 diversified into the hospitality business. Today the hospitality business is the largest segment in terms of the Total Capital Employed.  But it was not profitable since 2013.

The hospitality segment’s poor performance was due to competitive pressures. The Group had refurbished and rebranded the hotels to address this. At the same time, it had also focused on efficiency to improve the margins.

There are signs that gross profit margins are improving but the jury is still out on whether revenue will improve. The hospitality business is a turnaround case. Because of its size, the creation of shareholders’ value will depend on a successful turnaround.

For more insights into Bursa companies go to “Are these outstanding stocks - what to consider? (Bursa Malaysia)”

[weijian]

So this is a Daim (Tun M's little sidekick) stock. Tun Daim hasn't been really doing well with the new Gov and his lifelong supervisor's party losing all their deposits in the last election.

So I wonder what are the risks of investing in such "stocks linked to political figures", besides the obvious "they lose when their backers lose political power"?

After Avillion stake sale, interest in Plenitude raises eyebrows

Meanwhile, a spike in the trading volume of Plenitude Bhd shares last week has added to the speculation that Daim or his family is selling their equity interest and cashing out, given that his family members own a large stake in the property developer.

Ikatanbina Sdn Bhd is the largest shareholder of Plenitude with 32.19% equity interest, followed by Fields Equity Management Ltd (21.33%) and En Primeurs Sdn Bhd (5.48%).

A CTOS search shows that Ikatanbina is 44.44%-owned by Welberton Private Equity, while the other two shareholders are Khadijah Abdul Khalid (33.33%) and Siti Kulthum Abdul Khalid (22.22%). Both Khadijah and Siti Kulthum are Daim’s sisters-in-law.

Yayasan Haji Zainuddin, which was set up by Daim, has a smaller holding of 1.05% in Plenitude. Daim and his wife Naimah ­Abdul Khalid are directors of Yayasan.

https://theedgemalaysia.com/article/afte...s-eyebrows

[i4value]

Leaving aside the political figures behind the company, this was a successful property developer. Its problem started when it diversified into the hospitality business. OK we can interpret why the company did this from the "ownership" angle. But the hospitality business is a tough one in Malaysia as the country has one of the lowest hotel rates in the region. You may of course see this as an opportunity should the room rates rise to match the regional counterparts.

[weijian]

Leaving aside the political figures behind the company, this was a successful property developer. Its problem started when it diversified into the hospitality business. OK we can interpret why the company did this from the "ownership" angle. But the hospitality business is a tough one in Malaysia as the country has one of the lowest hotel rates in the region. You may of course see this as an opportunity should the room rates rise to match the regional counterparts.

Looking at the list of hospitality assets in Plenitude's AR22, most of them came after the below acquisition. And there you have it.

Property developer Plenitude offers to take over Nomad for RM278.84mil

Plenitude and Nomad are reported to be linked to associates of former Finance Minister Tun Daim Zainuddin.

https://corporateoffice.my/news/property...rm27884mil

For hospitality, it might not be wise to own the assets, unless we are talking about the best in class that allows higher than average capital appreciation (eg. luxury hospitality). It would be better to focus on the brand owners - for example. 2 of Plenitude's hotels (Oakwood/Ascott) are under Capitaland Group either in the form of franchise or mgt contracts.

[i4value]

Yes, Plenitude has rebranded the hotels with the Accor group. But I guess it will take some time for this to turnaround

[i4value]

Plenitude – a new hope

The performance of Bursa Malaysia Plenitude over the past decade was nothing to shout about with an average ROE of 4%. But this was because not all its cylinders were firing. Plenitude had 2 main businesses – property development and hospitality.

The hospitality business used up about half of its capital. For most of the time over the past decade the hospitality business delivered losses. The profits for the group were contributed by property development.

But over the past 8 years, the group had been refurbishing and improving the operating efficiency of the hospitality business. Then in 2023, this business began to deliver profits. I would expect growing contribution from the hospitality business.

Can you imagine the potential returns when both property development and hospitality pull their own weight? I think the market price has yet to reflect Plenitude’s turnaround. https://www.i4value.asia/2023/03/is-plen....html#more