RHB upgrades Hua Yang to Buy

KUALA LUMPUR: RHB Research has upgraded Hua Yang to Buy from Neutral with a target price of RM2.52, it said in a note on Wednesday.

The research house said Hua Yang announced that it has signed a conditional SPA to acquire an 8.09-acre land parcel in Selayang for a total consideration of RM120mil. 

This translates into a land cost of RM340.51 psf, which is decent given that it has an approved plot ratio of five. 

The management expects the land to have an estimated GDV of RM800mil and will consist of serviced apartments with retail lots. 

The land is located along the Middle Ring Road 2 near the Selayang Wholesale Market and is situated in a relatively mature area. 

"Similar to its other recent acquisitions in Bukit Mertajam, we believe that Hua Yang will draw down some of its RM250mil sukuk facility to fund this acquisition," it said.

The research house is positive on the acquisition and expects it to further cement Hua Yang’s position in the Klang Valley. 

Including this acquisition, more than 60% of its available GDV of RM3.9bil will be contributed by its Klang Valley projects. 

"Furthermore, given the maturearea and ready access to Petaling Jaya and Kuala Lumpur via several 
nearby highways, we believe that there should be demand for Hua Yang’s affordable development. 

"We expect Hua Yang to price most of itsproducts at below RM500,000/unit for this development," it said.