UEM Land (BUY)

A new township in Desaru

• ULHB is entering into a JV with Khazanah to develop: 1) A high-end residential resort development surrounding two golf courses in Desaru, Johor, and (2) A beach club to cater to the residents of the resort development.  Indicative GDV is RM5.4bn.
• ULHB will take a 51% stake while Khazanah’s subsidiary Desaru Development Corp, will take 49%.
• Land cost appears reasonable at RM16.40 psf, but we are lukewarm given that we believe ULHB should have been diversifying away from Iskandar Malaysia to reduce concentration risk, instead of acquiring more landbank there. 
• Maintain forecast and target price of RM2.35 (25% discount to RNAV). Maintain BUY

Source: Hong Leong Investment Bank Research - 12 June 2012