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)”

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.

For more insights refer to page 20 of INVEST