PETALING JAYA: Sime Darby Property Bhd
(SimeProp) is in a good position to strengthen its earnings profile over the next few years as its recurring income platform gathers momentum, supported by expanding data centre, industrial and logistics assets as well as continued land monetisation across its flagship Elmina Growth Corridor in Selangor.
A recent site visit to the Elmina Business Park reinforced expectations that the property developer is steadily transforming from a conventional township developer into a broader owner and manager of income-generating assets, while new fund structures are expected to accelerate growth without placing excessive strain on its balance sheet.
Optimistic about SimeProp’s prospects, TA Research maintained its “buy” call on the company, with an unchanged target price of RM2.10, while CGS International (CGSI) Research reiterated its “add” rating, with a target price of RM1.85.
In its report, TA Research said it came away more positive on SimeProp following its visit to its Elmina Growth Corridor, which reinforced the area’s transformation from a conventional township into a growth corridor comprising residential, industrial, retail, data centre and build-to-lease assets.
“The key takeaway is that SimeProp’s recurring-income roadmap is gaining visibility,” the research house said.
It also noted that management is targeting assets under management (AUM) to expand from RM4.4bil currently to about RM10bil by 2028 and beyond.
It added that management remained confident recurring income could account for about 30% of group income by financial year 2028 (FY28), supported by full-year contributions from both data centres – DC1 and DC2 – once operational, before achieving its Shift32 target of a 60:40 property development-to-recurring income earnings mix by 2032.
TA Research believes this ambition is achievable if the proposed fund structure enables SimeProp to accelerate the development of rental-generating investment properties using third-party capital and fund-level leverage.
The research house highlighted the Elmina Business Park as a standout contributor, with launched industrial units fully taken up and industrial land prices rising from RM80 to RM90 per sq ft in 2019 to around RM120 to RM150 per sq ft currently.
It also noted that DC1 has started contributing rental income since April 2026, while DC2 remains on track for completion in FY27 and will be placed under the New Economy Venture (NEV) segment.
Although TA Research estimated that SimeProp’s effective 50.01% economic interest in NEV could reduce FY28 earnings by around RM50mil compared with full ownership, it viewed the structure positively.
“We view NEV as a sensible trade-off, as lower direct ownership is balanced by capital efficiency and the ability to scale a larger pool of rental generating assets using third-party capital,” it explained.
Furthermore, CGSI Research reaffirmed its positive view on Elmina Business Park, citing resilient sales, sustained land monetisation and accelerating recurring income assets.
The research house noted that the 1,500-acre development, with a gross development value of RM9.9bil, has already activated 47% of its potential, while more than 80% of industrial lots launched under the second phase in January 2026 have been taken up.
CGSI Research expects recurring income to contribute about 30% of earnings by FY28, driven primarily by the two built-to-lease data centres, alongside retail and industrial assets.
It estimated that the two data centres could generate RM130mil to RM140mil in annual profit after tax, equivalent to around 18% to 19% of its FY28 core net profit forecast.
The research house also expects AUM to more than double over the next three to five years, supported by projects including the second-phase data centre, Metrohub 3 and 4, a new mall in Serenia City, and other investment assets.
It added that the NEV fund should provide a meaningful medium-term catalyst through earnings contributions and recurring asset management fees, while supporting faster AUM expansion.
Meanwhile, one analyst said SimeProp’s strategy is increasingly shifting towards building a more balanced earnings profile, where recurring income complementing its established property development business.
“If execution remains on track, this should enhance earnings resilience and improve the market’s confidence in the group’s long-term growth trajectory,” he told StarBiz.
