CIMB Research positive on KL Kepong, UEM Sunrise JV

KUALA LUMPUR: CIMB Equities Research is positive of UEM Sunrise’s two joint ventures with Kuala Lumpur Kepong (KLK) under which it swaps a 60% stake in 500 acres of Gerbang Nusajaya land for a 60% stake in 2,500 acres of KLK's Kulai land.

It said on Monday the move would help accelerate the development of Nusajaya while potentially providing UEM Sunrise’s access to KLK's vast landbank.

“This does not affect our earnings forecasts for now as the JV is likely to only contribute to the group from 2017 onwards. We maintain our Add call and target price of RM3.50 based on an unchanged 10% discount to RNAV. The stock could be catalysed by this news, positive earnings momentum and a rebound in interest in Iskandar Malaysia,” it said.

CIMB Research said UEM Sunrise’s share price had taken a hit since last October's 2014 Budget measures to curb property speculation and more recently, its removal from the KLCI.

“This has brought down its valuations to even more attractive levels. Investors should accumulate UEMS on the back of more positive newsflow on Iskandar Malaysia and a rebound in broad property demand in Malaysia, likely by mid-2014,” it said.