Real Estate

Developers Also Participating In The NETR

• Maintain OVERWEIGHT; Top Picks: UEM Sunrise, IOI Properties and Matrix Concepts. We are upbeat on developers’ participation in the country’s National Energy Transition Roadmap (NETR). Provided the developers currently or likely involved in solar power generation are able to sort out the capex/financing required (potentially via JVs), we think this represents a good opportunity for those with massive landbank to utilise some of their non-core land, especially remote plots usually left vacant.
  Developers also playing a role in NETR. During the launch of the NETR yesterday, we understand that Sime Darby Property was featured as one of the companies planning to incorporate rooftop solar solutions for its property products going forward, and it is also exploring to commission utility scale ground mounted solar farms in Jerai, Kedah (365 acres) and Pagoh, Johor (635 acres), with a virtual offtake by high-demand users. We are upbeat on the initiative given the company, being one of the largest developers with a massive landbank in Malaysia, will be able to utilise and “monetise” its non-core land. SDPR will potentially be the generator, distributor and offtaker of solar energy, and the power will be supplied to Elmina Lakeside Mall and Elmina Business Park. However, the required capex for the commissioning is still unclear, and we believe the company may potentially JV with some solar players for this pioneer project. Over the near term, we do not think the impact on earnings will be significant, but in the longer run, it may be a new stream of recurring income, if successful. Also, we expect the company’s ESG rating to improve going forward.

• UEM Group to develop a large scale hybrid solar PV power plant. Yesterday, UEM Group has also signed an MoU with Itramas Corp, CMEC Wuxi, Blueleaf Energy and HEXA Renewables to develop a 1GW hybrid solar photovoltaic power plant in Malaysia that will be integrated with a renewable energy industrial park. While Itramas is the largest vertically integrated solar plant developer in Malaysia, CMEC Wuxi is a state-owned enterprise of China involving in solar PV power generation. Both companies intend to be the anchor tenants and initial green electricity offtakers within the renewable energy industrial park. Hexa Renewables and Blueleaf Energy should be the funding partners.

• Our view. As renewable energy will be the trend going forward, we are upbeat that developers are starting to participate in this national agenda. There was no mention on the location of UEM Group’s renewable energy industrial park, but we think it may be located at Iskandar Malaysia, given the company has existing landbank in Johor, and at the same time its 70%- owned subsidiary UEM Sunrise has almost 8,000 acres of land there. We believe a remote area will be chosen to construct a power plant, and Johor will see further investment flows and as such, positive spillover to property. Given the abundance of land in Johor, this initiative represents a good opportunity to monetise the landbank and generating income.

Source: RHB Securities Research - 28 Jul 2023