DRB-Hicom's RM240mil land purchase 'reasonable', says AmInvestment


KUALA LUMPUR: DRB-Hicom Bhd's RM240mil acquisition of land from Tradewinds Plantations Bhd appears to be reasonable compared with two recent transactions by Apex Healthcare Bhd and Malakoff Corp Bhd, says AmInvestmentment Bank research.

The purchase comes to about RM830,000 per acre, which it said is reasonable compared with the two recent transactions where the groups acquired 18.8 acres and 176.5 acres for RM20.4mil and RM150mil, translating to RM1.08mil and RM850,000 per acre respectively.

The research house, which has a "buy" call on DRB-Hicom is neutral on the latest acquisition as it does not expect any earnings enhancements in FY20 and FY21.

It kept its fair value of RM2.49 a share on the stock on unchanged forecasts and estimates.

The acquisition will increase DRB’s net gearing of 0.73x as at 30 Jun 2020 to 0.76x.

DRB-Hicom is acquiring nine parcels of freehold land and one parcel of leasehold land measuring 287.7 acres in Alor Gajah, Melaka, to build new industrial parks in 2022, subject to future property market conditions.

The parcels are located about 6km from the group’s existing HICOM Pegoh Industrial Park in Melaka.

DRB-Hicom said the medium to long-term prospects of the land are favourable, given their strategic location and the various continuous initiatives undertaken by the Melaka state government to attract various investment projects into the state.
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