News UEMLAND entered into a Master agreement (MA)
with Ascendas Group to undertake development of an integrated tech park over c.
519 ac in Gerbang Nusajaya (c. 4500ac in total). A JV Co between UEMLAND (40%)
and Ascendas (60%) will be established to buy the land progressively (from UEMLAND)
and undertake the development over 9 years; the first tranche involves Phase 1,
Plot A (120ac) at a land base price of RM13.00psf. It is an agricultural land
with zoning approvals for industrial development (refer overleaf).
Comments Positive on the deal as it will help grow
economic activity and employment in Nusajaya which will fuel the area’s
population growth – a key success factor for Nusajaya. Additionally, Ascendas
will be able to bring-in new industrial players. We have always opined that Gerbang
Nusajaya will be used for such purposes although we did not anticipate the
strategic tie-ups with Singapore’s Ascendas.
Total GDV of RM3.7b
over 9 years, although development period could be shortened if the JV Co expedites
land acquisitions from UEMLAND. The project will feature >400 factories with
34,000 employees. We estimate 25%
project gross margins. However, earnings contributions will only be significant
in FY14E as the project is still at its
planning stage and will likely launch Phase 1 in 4Q13.
Outlook The group will be launching its CS2@Puteri
Harbour (GDV: RM0.9b) mixed development project soon. However, we understand a
few projects (e.g. Angkasaraya) which were earmarked to be launched this year
may be delayed and may have implications on its sales targets.
Forecast Raise FY12E net profit by 4% to RM377m.
Although project contributions are not immediate, we have imputed net land sale
gain of Phase 1, Plot A. We will factor for the remaining land sale gains upon
further timeline clarity. We are still estimating FY12E sales of RM2.7b
(UEMLAND’s target is RM3.0b), pending further clarity during the upcoming
results.
Rating Maintain
MARKET PERFORM
We raise TP to RM2.07
as the venture is a major catalyst for Gerbang Nusajaya which will lend
strength to future sales and stock sentiment. However we maintain our call as
sales for the year may be softer than expected and maybe subjected to higher GE
risks.
Valuation Raise
TP to RM2.07 (from RM1.85). The deal raises our FD SoP RNAV by 3% to RM3.38 and
we are also reducing our FD SoP RNAV discount rate to 39%* (from 44%).
Risks Unable to meet sales target. An up-cycle in
Singapore’s property sector. GE and sector risks, including negative policies.
Source: Kenanga
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