• Maintain BUY and MYR2.20 TP, 44% upside and 5% FY25F (Mar) yield. Management remains confident with the upcoming growth prospects, in view of the pipeline demand from regional multinational corporations (MNCs) and Johor-Singapore Special Economic Zone initiatives. New land in Taman Teknology Kulai and Northern TechValley in Penang will be the growth driver from FY26, while major landbanking in the central region could be a share price catalyst in the coming months.

• Stronger demand from China. During the briefing yesterday, apart from consistent interest from the MNCs already based in Singapore, management guided that deal flows from China remained strong in recent years, driven by the US-China trade tensions to a certain extent. Meanwhile, enquiries from data centre (DC) players are still coming in, but AME Elite Consortium prefers to maintain its position as an industrial park expert and continues to focus on domestic and foreign investors in the manufacturing sector that it sees as truly creating job opportunities and positive spillover.

• Nimble in response to speed to market. In response to the robust demand from MNCs in the region while speed to market remains one of the top priorities, management plans to introduce a small number of built-to-suit or standard factory units in its industrial park. We think this is a strategic move, as immediate demand opportunities can be captured, and industrial clients can subsequently opt to do their own renovations.

• New land to drive growth from FY26 onwards. Management is currently in the midst of converting the new 37.5-acre land in Taman Teknologi in Kulai from commercial to industrial status. Depending on market demand, some built-to-suit units may be rolled out. Otherwise, the land may be subdivided into three parcels to cater for the demand from MNCs which are looking for a larger land size. Meanwhile, the Northern TechValley @ BKE in Penang will be officially launched in 4QCY24. We learnt that the marketing team has already received various interest from local and foreign players during the current soft launch, and some are in the medical equipment device manufacturing sector, as well as distribution and warehouses industry.

• Potential landbanking in the central region. Being an expert in industrial park development, AME plans to leave a footprint in the central region. Management may be exploring some JV opportunities with landowners, and we think if the land is sizeable enough, it could be a share price catalyst given the potential incremental value to our RNAV estimate. Currently the group has a net cash of MYR115m, and it is also in the midst of monetising some industrial properties worth MYR119m to the REIT.

Source: RHB Research - 6 Sep 2024