PETALING JAYA: Hong Leong Investment Bank (HLIB) Research is positive on UEM Sunrise Bhd's acquisition of freehold land measuring 3.7 hectares in Kelana Jaya for RM155mil.
“We are positive on the acquisition given that it has a fair acquisition price with cost-to-gross development value (GDV) ratio of 14.1%, the strategic location of the land and the quick turnaround with launch targeted in 2025,” HLIB Research said.
It added that the land is located in the mature neighbourhood of SS6 Kelana Jaya with access to amenities such as SS6’s retail hubs and Paradigm Mall.
HLIB Research said the land is also situated opposite Taman Bandaran Kelana Jaya, Petaling Jaya’s largest and one of the most well-known parks in the area.
The land currently houses Giant Mall with its lease expiring on Dec 16, 2023.
UEM Sunrise plans to redevelop the site into a mixed-use development comprising residential and retail components with an estimated gross development value (GDV) of RM1.1bil and targeted to be launched in 2025.
“Post-acquisition, the group’s net gearing will increase to 48.1% from 45.9% as at 1Q23. With the acquisition, the group’s remaining landbank and GDV in the central region stands at 175 hectares and RM29.5bil, while the total remaining GDV for the group stands at RM67.2bil,” HLIB Research said.
The research house has maintained its “hold” call on the stock with an unchanged target price of 28 sen based on 85% discount to its estimated RNAV of RM1.90.
“We are turning slightly more positive on the group’s outlook given better visibility on the launch pipeline, activation of its high-value project as well as easing of labour shortage conditions. The group’s net asset per share of RM1.33 should provide some downside support to its share price,” HLIB Research said.