INVESTORS who have held on to YNH Property Bhd shares over the years would be rejoicing at the unexpected rally in the counter over the last few months.

After sliding to a low of RM1.12 in March this year, the stock more than doubled between April and July to hit a 14-year high of RM2.80 on July 31.

But what has caused the rally in the property stock when many of its peers are currently in the doldrums?

To put things into perspective, YNH is trading at 67 times its 12-month historical price-to-earnings ratio (PER) and 1.46 times its net asset value of RM1.74 per share.

This compares with an average of 14 times PER or 0.5 times price-to-book of property companies listed on Bursa Malaysia.

The company’s high valuation has drawn attention because property stocks are not in favour, no thanks to the prolonged slowdown in the sector, with a recovery nowhere in sight. This is evident from the Kuala Lumpur Property Index (KLPRP), which is hovering at 2010 lows.

A random check on company filings of shareholding changes shows that from April 1 to Aug 31, YNH chairman Datuk Dr Yu Kuan Chon was actively trading the company’s shares almost daily.

Company filings show that Yu, who is the single largest shareholder, made 80 transactions, involving 59 million shares, during that period, eventually acquiring a net 1.97 million shares, or a 0.37% stake. As at Aug 16, he controlled 32.58% of YNH, company filings show.

Apart from YNH, it appears that Yu was also actively trading shares in two other listed companies — precision tools and moulds manufacturer Rapid Synergy Bhd where he is the largest shareholder, and agrochemicals manufacturer Imaspro Corp Bhd.

Between April and August, he sold a 10.75% stake in Rapid Synergy but bought a 19.26% stake for a net gain of 8.51%, raising his effective stake to 31.16% as at Aug 20.

At Imaspro, he bought 7.52% but sold 11.09% for a net reduction of 3.57%, reducing his effective stake in the company to 15.9% at end-August.

That said, Rapid Synergy and Imaspro did not see the strong rally that YNH experienced. Between April and August, Rapid Synergy’s share price rose only 2% to RM5.75 while that of Imaspro climbed 8.82% to RM2.18.

Back to YNH, the developer’s net profit for the six-month period ended June 30, 2019 (6MFY2019) grew 54.4% to RM12.8 million from RM8.29 million on lower cost of sales and operating expenses. However, its revenue dropped 18.4% to RM145.08 million, from RM177.78 million in the same period last year.

This came as YNH recognised profit from completed projects, namely Kiara 163 in Mont’ Kiara, a small office versatile office development, and Sfera Residency condominium in Seri Kembangan.

On its prospects, the group said it has a series of joint-venture projects in Kuala Lumpur and Perak that are currently in the planning stages.

YNH, which originated in Sitiawan, Perak, has ongoing projects mainly in its township development in Seri Manjung, Perak. About 70% of its 1,000-acre land bank worth RM1.08 billion is within the township.

But there are several interesting parcels that YNH has not capitalised on for some reason. This includes a 95-acre plot in Genting Highlands that it bought for around RM16 million nearly a decade ago.

The developer also owns a prime three-acre parcel in Jalan Sultan Ismail opposite the Concorde Hotel, which it acquired for around RM63 million. It had proposed to build Menara YNH on the site, worth RM2.1 billion in gross development value, about 10 years ago. However, the group has yet to secure the right partners for the project, although it signed a 2015 memorandum of understanding (MoU) with the Hilton group to manage a hotel there.

The proposed project had earlier attracted big names including Singapore’s CapitaLand Ltd and Kuwait Finance House Bhd, but they eventually pulled out.

Some observers estimate that the Genting and Jalan Sultan Ismail land parcels have a book value of about RM400 million each, but the sloping terrain in both locations would makie it a challenge to develop.

The rally in YNH shares seems to have started losing steam. The counter closed at RM2.57 last Thursday, a 8.21% decline from the peak of RM2.80 just over a month ago.

Given the big leap in its share price, YNH will have to work hard to justify the valuation.