UEM Land; Hold
Price Target: RM2.10; ULHB MK

UEML announced that its subsidiary, Nusajaya Premier Sdn Bhd (NPSB) has entered into a shareholders’ agreement with Iskandar Coast Sdn Bhd (ICSB, 80%-owned subsidiary of Iskandar Investment Berhad) to form a 80:20 JV for a residential development in Puteri Harbour, Nusajaya by acquiring the following:

i) 63.047 acres of freehold land from ICSB for RM48.1m, implying RM17.5psf

ii) 22.395 acres of land from Bandar Nusajaya Development Sdn Bhd (wholly-owned subsidiary of UEML) for RM17.1, implying RM17.5psf (collectively, proposed land acquisition)

To recap, NPSB acquired 122.28 acres of land from Khazanah Nasional for RM93.2m (RM17.5psf) in July 2012, which is also located in the vicinity of the abovementioned land acquisition. Upon completion of the proposed land acquisition, NPSB will have a total of 207.7 acres of land bank which is currently still classified as agricultural land. It is adjacent to Kota Iskandar (Johor government administrative center) and is ~40km to the south-west of Johor Bahru City Centre.

As part of the shareholders’ agreement, ICSB will also grant a 5-year option to NPSB to acquire 2 more adjoining parcels of lands located adjacent to the land measuring up to 270.548 acres.

NPSB intends to develop the land into a premier residential enclave featuring a mix of canal-front homes with individual berthing and high-end condominiums. The project is expected to span over 7 years and commence in 2014. Nevertheless, the project is still at this early stage, pending the finalisation of a detailed layout plan. Therefore, we maintain our earnings forecast and HOLD rating. Our TP is under review.

Source: HwangDBS Research - 17 Apr 2013