MMC is selling 3 parcels of land totalling 188.743 acres in Senai Airport City, Johor to IPark Development Sdn Bhd for RM370m. The proposed disposal will result in an estimated gain of RM153.52m to MMC (about RM0.05/MMC share). Proceeds from the sale will help its unit Senai Airport City Sdn Bhd (SACSB) speed up development in the area and pare down group debt. SACSB, which owns 2,718 acres in Senai, is the master developer of Senai Airport City. The area surrounding Senai Airport is being developed into an integrated industrial zone. (Source: Starbiz, Bursa)

Comments: We are mildly positive on this development, as the proposed land disposals will help to pare down the MMC’s overall gearing. We estimate the proposed land disposal translates to RM45 per sq ft, which is comparable to the c.RM50 per sq ft pricing when Hershey bought 41 acres in Senai Airport City back in 2013. Based on the new pricing benchmark set by the transaction with IPark, the Senai Airport City land may be worth RM5bn. No change to our BUY rating on MMC with a TP of RM3.15.

Source: Affin Hwang Capital Research - 12 Aug 2015