INVESTMENT HIGHLIGHTS

• Bandar Seri Coalfields has GDV of RM4.0b

• North Haven Coalfields is the focus for FY18

• Property division contribution should grow in the future

• RM10.0b of GDV for other land in Sungai Buloh/Ijok

• Maintain BUY with TP of RM27.38

Bandar Seri Coalfields has GDV of RM4.0b. We visited Kuala Lumpur Kepong (KLK) property development project in Bandar Seri Coalfields (BSC) and returned feeling positive on the Company’s property division long term prospect. BSC is a 1,001 acres freehold township development in Sungai Buloh, Selangor. It is located ~45km away from Kuala Lumpur City Centre. Launched in 2011, the township has total GDV of RM4.0b and expected completion period is 15 years.

North Haven Coalfields is the focus for FY18. KLK has launched he maiden phase of North Haven Coalfields, Hemingway Residences which comprises 158 units of superlink homes (lot size 24’ x 90’) and 94 units of semi-detached homes (lot size 40’ x 100’). We gather that the price of superlink homes start from RM770,000 while the semi-detached homes start from RM1.15m.

Property division contribution should grow in the future. In FY17, property division registered PBT of RM40.5m representing small contribution of 3% to the Group’s total PBT. Despite the small contribution currently, we expect it to grow in the future due to other strategic landbank in Sungai Buloh.

RM10.0b of GDV for other land in Sungai Buloh/Ijok area. Besides BSC, KLK owns 2187 acres of landbank in Sungai Buloh and 415 acres in Ijok. Our estimate shows that the total GDV for these two new townships could exceed RM10.0b. KLK plans to launch the first phase in both landbank in 4QCY2019.

Maintain BUY with TP of RM27.38. Our earnings estimates are unchanged as the information gathered has been included previously. Our TP is based on Forward PE of 26.8x (+1.0SD Valuation). Maintain BUY on KLK for its earnings resiliency and decent dividend yield.

Source: MIDF Research - 20 Sept 2018