PETALING JAYA: Sime Darby Property Bhd
’s (SimeProp) proposed acquisition of a sizeable land parcel in Kulai, Johor, is expected to strengthen its foothold in the Johor-Singapore Special Economic Zone (JS-SEZ) while opening a new avenue for township growth.
The development could also build a sizeable long-term earnings pipeline as industrial, logistics and data centre (DC) investments deepen the employment base around the Kulai-Sedenak corridor.
TA Research said it was positive on the acquisition, which would give SimeProp a more meaningful platform to capture growth arising from the JS-SEZ. “The site should benefit from the established residential catchment at neighbouring Bandar Putra Kulai and growing employment base supported by industrial, logistics and DC investments in the surrounding area.”
It viewed the RM418.5mil acquisition price, equivalent to RM17.25 per sq ft (psf), as reasonable, noting that this falls within the RM15 to RM20 psf range seen in recent sizeable Kulai-Sedenak transactions.
“The preliminary RM3bil gross development value (GDV) looks reasonable,” TA Research said, adding that the remaining site could accommodate about 3,900 landed units based on its assumptions.
At an assumed average selling price of RM700,000 per unit, the residential component alone could generate around RM2.7bil in GDV, suggesting SimeProp could achieve its RM3bil target without aggressive assumptions even before taking into account commercial components.
TA Research maintained a “buy” call on SimeProp with an unchanged target price (TP) of RM2.10, based on 1.2 times price-to-book value with a 5% environmental, social and governance premium.
BIMB Research also maintained its “buy” call and RM1.79 TP, saying the deal secures a 557-acre township platform at a reasonable entry price. “We view the acquisition positively as it secures a 557-acre township platform within the JS-SEZ at a reasonable RM17.25 psf, while pro forma net gearing remains manageable at 0.40 times under a 100% debt-funded scenario.”
However, it cautioned that the earnings contribution would be long-dated, with completion targeted by the second quarter of 2027, the first launch in 2028 and the development over 10 to 15 years.
