• We are optimistic about Simeprop's long-term prospects, relying on its strong unbilled sales of RM3.7bn and robust demand for industrial property development.

• The company has 15,322 acres of land bank located strategically on the west coast of peninsular Malaysia with Gross Development Value (GDV) of RM117bn to be unlocked for future development projects.

• Maintain a ‘BUY’ call with an unchanged TP of RM0.86, pegged at 0.6x P/B to FY24F BVPS of RM1.43. This implies a +0.6 Std. Dev. above its 5-yr historical average forward P/B of 0.5x.

Decent Operating Performance in 2023

Simeprop achieved total property sales of RM2.5bn in 9MFY23, representing 93% of FY23 sales target of RM2.7bn. This was primarily driven by Residential landed (38%), Industrial (33%), and Residential High rise (22%) of the total sales. The company also reported solid unbilled sales of RM3.7bn, indicating a 1.5x cover ratio as of 3QFY23, providing a strong revenue pipeline and earning visibility over the next 3 years.

Monetizing a Wealth of Land Assets

We remain optimistic that Simeprop will sustain its performance in 2024, thanks to its extensive land bank readily available for development. As of November 2023, the company’s Property Development segment holds a total land bank of approximately 15,322 acres, with a remaining developable land bank of 13,640 acres and a total remaining GDV of RM117bn. This spans across 25 active townships, encompassing integrated and niche developments, such as residential, commercial, and industrial properties. As of 9MFY23, the company has activated around 436 acres of land, including 99 acres for industrial purposes.

Championing Green Energy Initiatives

The company aims to leverage on the government's National Energy Transition Roadmap (NETR) policies to enhance its recurring income by implementing rooftop solar projects in Elmina. Additionally, the company has ambitious plans to establish a 1,000-acre solar farm in Kedah and Johor, with the goal of providing solar energy to consumers in the Elmina city township through virtual off-take contracts.

Maintain a BUY call with TP of RM0.86

We maintain a BUY call with a TP of RM0.86, pegged at 0.6x P/B to FY24F BVPS of RM1.43. This implies a +0.6 Std. Dev. above its 5-yr historical average forward P/B of 0.5x. We believe this is justified by its earnings growth potential moving forward, owing to (i) the monetization of its land bank, (ii) recognition from on-site progress property projects, and (iii) an increase in recurring income from booming demand for industrial properties.

Source: BIMB Securities Research - 24 Jan 2024