LBS Bina (LBS) announced that Sejuta Bina Sdn Bhd, an indirect wholly-owned subsidiary of the Group has signed a Joint Venture Agreement with Saga Tunas Sdn Bhd (landowner) to jointly develop six pieces of freehold vacant Malay Reserved Land with total land area measuring approximately 6.97 acres (or 304,408 square feet) located near Sungai Penchala. The land, which will be amalgamated into one plot, will then be developed into a mixed development that has gross development value (GDV) of about RM1bn. The landowner will be getting RM67m, as part of the land cost, while sharing 10% of the gross profit generated. Pending more clarity from Management, we keep our earnings estimates for now. As it is sitting on the Malay Reserved Land, we expect there might be certain restrictions, which among others, include can only market to Malay purchasers only and other conversion requirements. All told, we maintain our Outperform call given its attractive investment proposition and entrenched position as a leading player in the domestic mass-market affordable housing segment. Target price is unchanged at RM0.67 (60% discount to NTA), at parity to sector mean discount to NTA on account of its ability to monetize its land bank acquisitions/joint ventures quicker than its peers.

• RM1bn JV project details. We understand that the land is located near Empire Damansara, IKEA Damansara, eCurve, Bandar Utama, Mont Kiara and Sri Hartamas. It is approximately 8km and 7km away from Mont Kiara and Sri Hartamas respectively. As for accessibility, the land is said to be connected to major highways such as New Klang Valley Expressway (NKVE), Dash Highway, Penchala Link, Lebuhraya Damansara-Puchong (LDP) and North–South Expressway (NSE). The project is likely to be launched in phases and spanned over a development period of 5 years and works to be commenced about 12 months after the JV agreement becomes unconditional.

Source: PublicInvest Research - 6 Jul 2023