UEM Sunrise (UEMS) announced last Friday that it had acquired 6.86 acres of prime freehold land in Cheras, Kuala Lumpur for RM197m or c.RM659psf after signing a sale and purchase agreement with Accolade Land Sdn Bhd, the landowner. The estimated GDV is over RM1bn, and is slated for a two-phase launch, with the first phase planned in the second half of 2022. This latest landbank addition is consistent with Group’s strategy to expand its exposure in the Central region. To recap, it just acquired three parcels of prime land in Section 13, Petaling Jaya on Jalan Professor Khoo Kay Kim for RM200m back in March 2021 and also an 11.45-acre plot in Taman Pertama, Cheras, Kuala Lumpur in 2020. The price paid for the land, on our view, is fair at c.20% of the estimated GDV. Earnings estimates are unchanged for now pending more information. All told, we maintain our Neutral call with an unchanged TP of RM0.55, pegged at c.75% discount to RNAV.

• Earmarked for residential project in excess of RM1bn. We understand that UEMS has preliminary plans of developing c.1.8m sf of various types of “competitively-priced properties” aimed at young homeowners looking for residences with immediate accessibility to the city centre. The estimated GDV is over RM1bn and is slated for a two-phase launch, with the first phase expected to be unveiled in the second half of 2022. With the new landbank, its total land bank in the Central region stands at c.440.1 acres, amounting to an estimated total GDV of RM29bn.

• Asset rebalancing. This landbank addition is consistent with management’s strategy to rebalance its portfolio and increase its foothold in the Klang Valley especially strategic lands with quick turnaround. Recent moves saw the Group lowering its exposure in Johor, including the disposal of its 170-acre industrial land to AME Elite for RM434m, and the reduction of its stake in a firm developing 2,500 acres of land in Kulai, Johor for RM183m, while adding more development land in the Central region.

Source: PublicInvest Research - 8 Jun 2021