- Following our conversation with the management, the
following are more details on the land deal in Indonesia:-
- (1) The land is located nearby University Kristen Krida
Wacana – a private university – within Petamburan, which boasts several main
universities of Jakarta. We gather the price of the land was within the recent
transacted prices.
- (2) The development’s estimated GDV is US$65mil (RM205mil)
and will have a GFA of 900,000sf (NSA of 500,000sf) with 700 car parks.
- Given the location, it is not a surprise that 300,000sf
will be allocated for student accommodation and some retail properties.
Meanwhile, 200,000sf would be utilised for an office tower and a 3-star hotel
with 500 rooms. Not surprisingly also, the office would be sold, and we would
expect the hotel to be a platform for IGB to expand its St Giles brand into
Indonesia.
- (3) Management targets to start construction of the
development by the end of this year.
- Based on the figures given, the development would have a
marginal impact – ~5% uplift – to our NAV estimate due to the small development
value and the 58% stake in the JVCo.
- On the flipside, this would cap IGB’s risks of entering
into a new market, while possibly provide as a platform for the group to
penetrate the Indonesia market.
- However, going forward, 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.
- We reaffirm our BUY rating on IGB Corporation (IGB) with
our fair value kept at RM3.50/share based on a 22% discount to its NAV of
RM4.50/share.
Source: AmeSecurities
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