UEM Sunrise (UEMS) announced that it has entered into a sale and purchase agreement with Nipponkey Sdn Bhd (Nipponkey) to acquire a parcel of freehold land measuring 6.39 acres, situated at Lot 228, Jalan Sultan Yahya Petra (formerly known as Jalan Semarak), Kuala Lumpur for RM384m (of which RM148.2m will be paid in-kind with 16 plots of land measuring 107.8 acres in Nusajaya, Johor). The move is consistent with the Group’s strategy to lessen its landbank exposure in Nusajaya. With land cost at c.26% of the projected GDV of RM1.5bn, the price paid appears to be fair. No change to our earnings estimates as the deal is expected to be completed only in 1H2023. Maintain Neutral with TP unchanged at 33sen. 

• Land details. The land is a parcel of freehold land, measuring c.6.39 acres. We understand that the land use is for buildings and has a planning approval for a mixed commercial development. Development order (DO) was obtained on 12 March 2015, and is for mixed development which, among others, consists one block of five-storey shopping complex, eight-storey office, one block of 29-storey hotel encompassing 405 rooms and two blocks of 50-storey serviced apartments encompassing 948 rooms. The proposed development has a plot ratio of 1:7.38. The said land is located approximately 2.5 km to the north-east of the Kuala Lumpur Convention Centre and situated at the intersection between Jalan Sultan Yahya Petra (formerly Jalan Semarak) and Jalan Padang Tembak (Figure 1). The land is nearly diamond in shape, has a flat terrain, and has dual frontage roads i.e. Jalan Sultan Yahya Petra and Jalan Padang Tembak, which lie on the same level as the land.

• Land has projected GDV of RM1.5bn. The land has potential to have an estimated total gross development value (GDV) of approximately RM1.5bn. To be launched in phases in 2024 at the latest, it is expected to generate a steady revenue stream over the development period of approximately four years. We understand that the land is not subject to any affordable home requirement. To recap, UEMS announced an increased sales target of RM1.5bn in FY22, with plans to launch projects worth RM3.3bn. This includes activating the 1.3-acre site in Collingwood, Melbourne into a mixed-development project with an estimated GDV of A$250m (RM735m).

Source: PublicInvest Research - 5 Aug 2022