- IGB Corporation
announced on Bursa that it had signed a joint-venture agreement (JVA) with
Aspire Horizon to set up a JVCo – Wilmer Link Ltd – with a 58:42 equity
structure. The JVCo will serve as a platform for the shareholders to set up a
special purpose vehicle (SPV) in Indonesia for a property development
venture.
- We gather that JVCo
is acquiring a parcel of land measuring 11,000sqm (2.72acres or 118,403sf) for
US$30.8mil (RM97mil/RM819psf) in Jakarta Barat. We believe the land will be utilised
for a mixed commercial/residential development, comprising apartments and a hotel.
- We are not imputing
this deal into our model at this juncture due to the absence of details. However,
it is a positive that the group has started being proactive in redeploying its capital
with the expected gain from the listing of its two malls later this year.
Despite the unfamiliar territory, IGB’s risks are cushioned by the JV with the
local partner. This could be the start
of some exciting land deals to be made by IGB; recall that we had highlighted earlier
that the group was eyeing other overseas developments, namely in London and Taipei.
- Just to recap, IGB
will benefit handsomely from the listing of MidValley Megamall and Gardens Mall
via an establishment of a REIT. The malls are valued at RM4.6bil or at a whopping
RM1,815psf, and would result in a revaluation gain of RM1.3bil to KrisAssets or
RM992mil (or RM0.67/share accretion) to IGB.
- There will be a
special dividend and capital repayment amounting to RM1.27bil, which translates
into an attractive RM2.88/share. Based on IGB’s 75% stake, the company stands to
get a handsome cash payment of RM951mil or RM0.64/share.
- There is a further
revaluation surplus of RM1.05bil in IGB’s under-appreciated portfolio of well-occupied
office buildings (2.2 million sf), which are carried in its book at low
historical costs. A hospitality REIT for its hotel assets would complete the
re-pricing of its assets, transforming IGB into an asset-light fee-based entity
with controlling stakes in three listed asset-specific REITs.
- We reaffirm our BUY
rating on IGB with our fair value unchanged at RM3.50/share based on a 22%
discount to its NAV of RM4.50/share.
Source: AmeSecurities
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