l Digi 19:32 25% Question 1 Based on the article below, suggest the possible implications of Hua Yang Bhd's gearing situation on the company's: Current borrowings (8 marks) b additional borrowings in the near (8 future marks) HUA YANG ACQUIRES FOUR PARCELS OF LAND IN KAJANG FOR RM70 MILLION Hua Yang Bhd (Dec 28, 60.5 sen) Upgrade to market perform with a lower target price (TP) of 63 sen: Yesterday, Hua Yang Bhd announced that it is acquiring four parcels of freehold land measuring 19.8 acres (8ha) for a total consideration of RM70 million or at RM81.3 per sq ft (psf). The land is adjacent to the Kajang 2 development and is accessible via Jalan Reko via the Kajang SILK Highway We were surprised with Hua Yang's land banking move as we were not expecting any land banking activities for the year, given its high net gearing of 0.70 times (as of second quarter ended Sept 30, 2017 [2QFY18]) Hua Yang's management estimates a gross development value (GDV) of RM800 million for these four parcels of land, which we believe is fair as it would translate to an average selling price of RM300 psf derived from four times plot ratio, enabling them to position its product below RM500,000 per unit in the Klang Valley for the affordable segment. In terms of land cost, we deem that it is reasonable as the land cost to GDV ratio of 8.8% is still within our comfortable range of 15% to 20%. While we are positive with its land bank replenishment, we remain worried about its high net gearing of 0.70 times (as of 2QFY18) which l Digi 19:32 25% Question 1 Based on the article below, suggest the possible implications of Hua Yang Bhd's gearing situation on the company's: Current borrowings (8 marks) b additional borrowings in the near (8 future marks) HUA YANG ACQUIRES FOUR PARCELS OF LAND IN KAJANG FOR RM70 MILLION Hua Yang Bhd (Dec 28, 60.5 sen) Upgrade to market perform with a lower target price (TP) of 63 sen: Yesterday, Hua Yang Bhd announced that it is acquiring four parcels of freehold land measuring 19.8 acres (8ha) for a total consideration of RM70 million or at RM81.3 per sq ft (psf). The land is adjacent to the Kajang 2 development and is accessible via Jalan Reko via the Kajang SILK Highway We were surprised with Hua Yang's land banking move as we were not expecting any land banking activities for the year, given its high net gearing of 0.70 times (as of second quarter ended Sept 30, 2017 [2QFY18]) Hua Yang's management estimates a gross development value (GDV) of RM800 million for these four parcels of land, which we believe is fair as it would translate to an average selling price of RM300 psf derived from four times plot ratio, enabling them to position its product below RM500,000 per unit in the Klang Valley for the affordable segment. In terms of land cost, we deem that it is reasonable as the land cost to GDV ratio of 8.8% is still within our comfortable range of 15% to 20%. While we are positive with its land bank replenishment, we remain worried about its high net gearing of 0.70 times (as of 2QFY18) which