PETALING JAYA: KSL Holdings Bhd
’s share price has more than doubled in the past month, but the Johor-based developer still trades at a “steep” discount to peers, backed by a large land bank, “sector-leading” profit margins and steady recurring income, according to Affin Hwang Investment Bank (Affin Hwang IB) Research.
In its latest note, the research house said KSL trades at just 8.3 times financial year ended Dec 31, 2024 (FY24) price-to-earnings ratio (PER) and 0.82 times price-to-book (P/B), well below the sector average of 23.7 times PER and one time P/B.
KSL currently holds 4,946 acres of land, 93% of which are in Johor, with more than half strategically located within the Iskandar Malaysia growth corridor, with potential gross development value (GDV) of about RM8.5bil.
It operates on a structurally low-cost base, with legacy land acquired at RM3 to RM6 per sq ft (land cost-to-GDV ratio of below 1%) and an in-house construction arm that enables it to consistently deliver “sector-leading” profit margins, Affin Hwang IB said.
“KSL is strategically positioned as a direct proxy to Johor’s structural growth story, underpinned by catalysts such as the Johor-Singapore Special Economic Zone, the upcoming Johor Baru-Singapore RTS Link, and cross-border demand spillover from Singapore,” it noted.
Affin Hwang IB Research said, in 2024, KSL expanded its land bank by acquiring more than 1,000 acres across Johor Baru, Batu Pahat and Segamat at around RM30 per sq ft from distressed developers, raising land-related assets on the balance sheet to about RM2.8bil.
“The entry cost of about RM30 per sq ft, versus historical acquisitions at below RM6, and compared to current average market transactions of RM65 for residential land, still provides significant pricing power and margin headroom, while creating optionality to tilt more towards industrials from a largely residential portfolio,” it said.
Meanwhile, on the development pipeline, the research house said KSL is stepping up its launches in the second half of financial year 2025 (2H25), with RM3.5bil worth of projects planned, bringing the total for the year to RM3.7bil.
This comes after a muted 1H25, where only RM223mil worth of projects were launched amid “policy and macroeconomic uncertainties”.
On sales, Affin Hwang IB Research said momentum has rebounded strongly in recent years, rising to RM1.29bil in FY23 and RM1.46bil in FY24.
For FY25, the research house said KSL has guided for RM1.2bil in sales, of which 41% has already been achieved in the first half.
Unbilled sales stood at RM684mil in FY25, compared with RM590mil in FY24, providing earnings visibility, it added.
Beyond property development, KSL also derives recurring income from its investment properties, which contributed 18% to group revenue in FY24.
These include KSL City Mall, KSL Esplanade Mall, and three operating hotels in Johor.
Affin Hwang IB Research noted that revenue is anchored by KSL City Mall, with a net lettable area of 450,000 sq ft, contributing about 60% of the segment’s topline. It said the three hotels make up around 15%, supported by steady occupancy.
The research outfit said KSL Esplanade Mall accounts for about 5% as it remains in the early ramp-up phase, while the balance 20% comes from smaller assets and ancillary rentals.
Looking ahead, Affin Hwang IB Research said KSL has guided FY25 to come in soft given the backloaded launch schedule, with earnings momentum only meaningfully kicking in from 2H25 onwards.
“The stronger earnings story lies in FY26, when spillover billings from 2H25 launches and rental revisions at KSL City Mall should drive a sharper earnings recovery,” it said.
