SIMEPROP (5288)-Main market, Property

As the largest industrial developer in Malaysia, SIMEPROP’s is well-positioned to capitalize on the thriving industrial segment, which is benefitting from strong FDIs as a result of re-shoring activities by global manufacturers due to rising geopolitical tensions. This should bode well for the industrial contribution to SIMEPROP’s sales, which had seen sizeable increase from 0% in 2019 to 33% of its 9M23 sales. This segment is attractive, fetching higher margin and faster construction time compared to residential.

Landed residential is SIMEPROP’s forte. Overall, green shoots are emerging for residential landed in greater Klang Valley (KV) as evident from the improving and strong take-up rates enjoyed by landed township developers not only in KV but also in the fringe areas of Negeri Sembilan. Given that 94% of the group’s remaining GDV are in the greater KV region, the group is poised to greatly benefit from this trend.

Reiterates BUY with a RM1.05 TP (ascribing a 50% discount to our estimated RNAV of RM2.10) as the group’s strong execution track record and well-planned strategies should allow it to ride this new upcycle.

Positive Cup with Handle formation may spur share prices higher towards 0.765-0.795-0.93 levels

✅Current price: RM0.71

✅Entry: RM0.69-0.71-0.715

✅Resistance: RM0.765-0.795-0.93

✅Cut loss: RM0.675

✅FY12/2024E DY: 3.4%

✅Latest Book value/shr (RM): 1.45

✅Price/book value (x): 0.49 (-18% vs 10Y avg 0.6x)

✅Risk profile: Medium

Source: Hong Leong Investment Bank Research - 23 Jan 2024