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

UEML announced that it has entered into a sale & purchase agreement (SPA) to dispose of 12.5 acres of its land in Puteri Harbour, Nusajaya to Southern Marina Development Sdn Bhd for RM182m, implying RM333.8psf, which is a record high pricing in Nusajaya. The proposed development by Southern Marina will comprise a mix of residential and commercial development with GFA of more than 2m sq ft (GDV exceeding RM1bn).

Southern Marina is a 70:30 JV between Huge Quest Realty Sdn Bhd (60% owned by Kuok Brothers, 40% owned by PPB Group) and Tanjung Bidara Sdn Bhd (wholly-owned subsidiary of Khazanah Nasional). The purchaser will have to commence construction works on the land no later than 24 months from the completion date of the SPA which is expected by Apr14.

We are pleasantly surprised by the proposed land disposal as we understand that UEML previously had only been considering high-rise development on those prime Puteri Harbour land on its own. We believe that the proposed disposal is to help expedite the overall developments in Puteri Harbour with the participation of established property developers. UEML is expected to book RM81m gain on disposal from the transaction.

We maintain our earnings forecast and HOLD rating for now given that the timing of the completion of the proposed disposal remains fluid at the moment, though it could boost our FY14 earnings forecast by 17%. Our TP is under review.

Source: HwangDBS Research - 23 Apr 2013