• Radium is a net cash (19% of market cap) high-rise property developer in KL region; backed by strong historical sales track record (80-90% take-up by 18M) focusing mostly on fast-moving property units below the RM600k price tag.

• We project core earnings to grow by 27.3% and 13.0% to RM100.6m and RM113.7m in FY23-24f, on (i) recognition of existing unbilled sales, (ii) ongoing projects and upcoming launches of RM3.36bn in GDV and (iii) strong take up rates.

• Radium is valued via market-cap weighted P/E of 18.1x pegged to 3.3 sen FY24f EPS, leading to a fair value of RM0.595, with a prospective DY of 1.7-2.0%.

Company Background

• Radium Development Berhad's (Radium's) history can be traced to the incorporation of Idaman Sejiwa Development Sdn Bhd on March 19, 2013, with a focus on initial stage project planning, obtaining necessary approvals from relevant authorities, and making necessary preparations for construction. Subsequently, Radium launched their first development project in 2017; Residensi Semarak Platinum, which consists of 1,400 condominium units and 600 units of affordable housing with a total gross development value (GDV) of RM885.4m.

• Over the years, Radium has positioned itself as a reputable property developer focusing on the development of competitively priced high-rise residential properties in urban Kuala Lumpur such as Residensi Wilayah (price ranges between RM230,000-318,000), Perumahan Penjawat Awam Malaysia (PPAM) whereby price ranges between RM150,000-300,000 and condominium/service apartments whereby price ranges between RM329,800-758,000).

• Radium has completed 4 projects and is working on 3 on-going projects. Moving forward, Radium aims to launch 2 projects in FY24. Based on Radium’s revenue of RM563.7m recorded in FY21, the group commands c.10.0% of market share sales value for high-rise residential in KL and approximately 7.0% market share in number of units of high-rise residential properties sold (515 units) in KL in 2021.

• Radium focuses primarily on the construction of high-rise residential buildings in urban Kuala Lumpur, including condominiums, serviced flats, and affordable housing under own initiative.

• Radium has finished 4 projects (condominium and affordable housing projects) since 2017 with a combined GDV of RM2.13bn. We understand that due to their accessibility to public transport and excellent position in the Kuala Lumpur region, all the projects have achieved full take-up rate within 6-18 months.

• Radium is working on 3 high-rise projects with a combined GDV of RM1.78bn. The recently launched Suite Canselor (R Suites Chancery Residences), which consists of 944 SOHO units and has an estimated GDV of RM474.4m, is scheduled to be completed in 4Q25. The hotel operations, which will have 145 rooms, are scheduled to start in 3Q26.

• While past projects are targeted towards the mass to address the housing affordability issue in the nation, we gather that R Suites Chancery Residences’ selling price between RM455,000-867,000 (c.RM800-1000/sqf) deemed to be fair, premised to the strategic location near the heart of Kuala Lumpur city. This will also be supported by various accessibilities such as Ampang-Kuala Lumpur Elevated Highway (AKLEH) and Kuala Lumpur Middle Ring Road 2 (MRR2) as well as LRT Ampang and LRT Pandan Indah stations.

• Going forward, Radium is on track to launch another high-rise project located at Sg. Besi comprising 1,218 units of suite apartment and 1,218 units of Residensi Wilayah that sits on 9.8-ac of land will carry an estimated total GDV of RM994.5m. The aforementioned project is targeted to launch in 3Q23 and is expected to be completed in 4Q27.

• Radium is actively seeking to replenish their land bank with their IPO proceeds and has shortlisted 3 parcels of land in Klang Valley for the development of high-rise projects. Apart from that, Radium has also entered into a joint venture agreement with Kadar Jutajaya Sdn Bhd for a development of 404 units of Residensi Wilayah and 932 units of condominium which is expected to commence in 1H24, subject to approvals from relevant authorities.

• We gather that the diversification into the hotel operations tentatively in 2026 is a noteworthy initiative to eliminate the reliance onto a single income stream from the property development business. Despite contribution may be insignificant against the group’s total revenue in the initial years, we reckon that hotel operations may generate sustainable and stable recurring income over the long run.

• The hotel will be conveniently situated across from the KPJ Ampang Puteri Specialist Hospital, which may be a location that follows the growth within the medical tourism sector. Currently, Malaysia is ranked among the top medical tourism destination in Asia, alongside India, Thailand, Singapore and South Korea.

Source: Mplus Research - 8 May 2023