3Cnergy in focus (502.SI)
(14 July 2017) close: S$0.052
Mean Target price: S$- (No research houses covering; No consensus estimates are available)
1.) Sector: Investment holding.
2.) Core business structure: Property development.
3.) Segment that generates the highest revenue: Real estate and property development consultancy.
4.) Countries that the business operates: Singapore and Malaysia.
5.) Challenges: Lacklustre property demand in Johor; high supply of properties in the last 2 to 3 years; tightening of mortgage loan approvals.
6.) Strengths: Affordably priced and unique property products that cater to market segments that are currently not served while preserving profitability.
7.) Significant events: 2016 has seen steady inflows of foreign investments into the state. Further, the Malaysian government’s commitment to promote Iskandar as a Strong and Sustainable Metropolis will allow the company to further conduct property development operations there- of which, Iskandar’s proximity to Singapore also gives it further locational advantage.
9.) ALP Conclusion: 3Cnergy seems to be going through a hard time. The Chairman Statement described financials as ‘bleak’, with the “loss of $5.5 million during the financial year (2015), after having also suffered losses for a few years previously.” Worse, “3Cnergy had no significant business operations and had no cash”, prompting the Chairman to extend an interest free loan of $5 million to the company. It remains to be seen whether the company can pull itself together with the acquisition of 3C Marina Park Sdn. Bhd., and proceeds of $5 million from its compliance placement.
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