PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 21 Jun 2021, 11:47 AM


Sime Darby Property - Monetisation of Battersea Power Station

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Sime Darby Property (SDPR) via Battersea Phase 2 Holding Company Limited, a wholly-owned subsidiary of Battersea Project Holding Company Limited which is, in turn, a 40% associated company of the Group has entered into a Heads of Terms with Permodalan Nasional Berhad (“PNB”) and Employees Provident Fund Board (“EPF”) to explore the terms of a potential sale, on completion, of approximately GBP1.6bn (c.RM8.80bn) of the commercial assets currently being developed within Phase 2 of Battersea Power Station project to a joint venture company to be formed between PNB and EPF. This is positive in our view, for the Group to monetize the commercial assets more efficiently and redeploy the capital into the subsequent phases in Battersea Power Station. Earnings are kept unchanged for now as information is still sketchy with the proposal still at early stage. Reiterate Outperform recommendation, with TP of RM1.90, pegged at c.40% discount to our RNAV estimates. Potential catalyst is mainly from asset monetization which is also part of the Group’s strategy to assess the best use of each piece of land, while disposing of non-strategic land.

  • The potential reorganization of ownership of Battersea Power Station commercial assets. The proposal among others include “the residential ground rents and the fabric, structure and common areas of Phase 2” of Battersea Power Station. We understand that residential pre-sales is now over 90% and the entire 470,000 sq ft of office space in the Battersea Power Station building has been let out to Apple. To recap, the Battersea Power Station project covers 42 acres and includes 3.5m sq ft of mixed commercial space, together with 4,364 new homes. Details are still light at this juncture but if the proposal materializes, we believe the Group’s earnings could be lifted by at least RM400m, by just assuming 15% PBT margin.

Source: PublicInvest Research - 19 Jan 2018

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