PETALING JAYA: UEM Sunrise Bhd
(UEMS) is a key beneficiary of the Johor Singapore Special Economic Zone (JS-SEZ) initiative, given its substantial 7,985-acre landbank in Johor.
Mercury Securities said with 94% (7,470 acres) strategically located within Iskandar Malaysia (IM), there is significant land monetisation opportunity for UEMS.
In a report, it said the surge in land transactions in Johor, particularly for data centre developments and heightened property demand in particular is driving such opportunity.
“Additionally, UEMS’ outlook is further enhanced by its robust pipeline of property launches in IM and the upcoming masterplan approval for its 2,334-acre development in Gerbang Nusajaya by mid-2025,” it told clients in a report.
Mercury said UEMS currently trades at a significant 50% discount to revised net asset value (RNAV), where it believes there is room for a re-rating.
This is underpinned by the robust outlook from the JS-SEZ initiative, an upward-revised financial year ending Dec 31,2024 (FY24) sales target of RM1.2bil (RM929mil sales achieved in 9MFY24), and strong unbilled sales of RM2.9bil, representing 2.2 times of its revenue.
The stock demonstrates a continued uptrend following a significant correction after reaching its 52-week high in early May, Mercury said.
It noted a swift recovery, aligned with renewed buying interest, has driven the stock into an upward trajectory, leading to a breakout from the triangle pattern.
With these bullish technical signals, the stock is poised to test key resistance levels at RM1.14 first and subsequently at RM1.21.
The recommended entry zone is at RM1.07 to RM1.08, stop loss at 97 sen, it added.
The JS-SEZ was formalised last week with the signing of a joint agreement between Malaysia and Singapore.
Following this, Mercury noted that the Finance Ministry also announced packages of tax incentives for both workers and investee companies.
“We think this bilateral cooperation between two countries is poised to catalyse a surge in foreign direct investment, drive relocation of Singapore- based firms to Johor (mitigate expansion cost in Singapore), and boost cross-border travel fueled by enhanced connectivity. In our view, these developments are likely to create a positive spillover, propelling the real estate demand in Johor.”
