Property Sector - More monetisation of government land OVERWEIGHT

- Syarikat Prasarana Negara (Prasarana) has earmarked several plots of lands in the Klang Valley, which include parcels in Ara Damansara, Brickfields, Dang Wangi, Putra Heights and the former bus depot land in Taman Melawati, for property development. 

- It was also reported that the tender exercise for the development on four acres in Ara Damansara had been closed and the tenders are now being evaluated. An announcement is expected to be made in a few months’ time. 

- In addition, the tender for a two acre-site near the monorail station in Brickfields is still ongoing and is expected to be closed on July 21. We will not be surprised if MRCB is one of the front- runners as this would provide a natural extension to its flagship KL Sentral.

- To recap, Prasarana had earlier signed its first two JV agreements for a mixed development at the Dang Wangi LRT station and Taman Tun Dr Ismail. The Dang Wangi land will be co-developed with Crest Builder Holdings Bhd with a GDV of RM220mil. 

- Meanwhile, Naza TTDI would be the co-developer of the land in Taman Tun which was previously a bus depot for Rapid. We understand a 26-storey condominium – 186 units with build-ups ranging from 680sf-1200sf – would be developed with a GDV of RM153mil or at an average price of RM950psf. This will be based on a 30:70 profit-sharing for Prasarana and Naza TTDI.

- We are not surprised that the government is actively unlocking its prime land for development due to land scarcity within the Klang Valley and the need to monetise its valuable assets. 

- Malaysian Rubber Board (MRB) recently awarded an LOI to Crest Builder for a jointredevelopment of a 5-acre piece of land in Ampang which will have a GDV of RM1.4bil – for a mixed commercial development. 

- However, the market is mostly looking forward to the award of the RRI land in Sungai Buloh, which is expected to be announced by 3Q2012. We understand that the 2,200 acre-land has a value of RM2bil (RM21psf). The land would be carved out in portions of 30 to 50 acres on average and we will not be surprised if the intense bidding would push the land prices up to RM100psf.

- We maintain our contrarian OVERWEIGHT stance on the sector, whereby we expect a strong return of pent-up demand to take place given the normalisation of the impact of lending guidelines, continued urbanisation and several prolific projects, including IJM Land’s Bandar Rimbayu, to kick-start buying momentum. 

- Our top pick is IJM Land (FV:RM3.80/share), given the unveiling of Bandar Rimbayu would drive its new sales by at least 50% to about RM2bil for FY13F. We also have BUY on IGB Corporation (RM3.50/share) and HOLD on SP Setia, BRDB, Sunway Bhd, CMMT, Pavilion REIT and Al Aqar Healthcare REIT.   

Source: AmeSecurities