“The acquisition is expected to increase the GDV (gross development value) for Scientex’s Durian Tunggal development projects to RM800 million.”
KUALA LUMPUR: Scientex Bhd’s recent acquisition of two pieces of freehold agriculture land in Durian Tunggal, Melaka, for RM68.2 million is a positive move, as it can strengthen its presence as a property developer in the state, say analysts.
TA Securities Holdings Bhd has made no changes to Scientex’s earnings forecasts and maintained its “sell” call on the company’s shares with an unchanged target price of RM7 apiece.
“We believe the acquisition will be financed by internally generated funds and 80 per cent via borrowings.
“With an estimated gearing of 0.4 times for its financial year 2018, Scientex will be able to bear the cost to finance the land,” said the research house in a note yesterday.
Scientex already has a township project on a 84.58ha site in Durian Tunggal.
The freehold agriculture land is located opposite the project, as well as near major highways and tourist spots.
The company plans to build mixed projects on the two plots.
TA Securities said currently, there was no gross development value (GDV) estimate for the planned developments from Scientex’s management as the acquisition was still at a preliminary stage.
“However, we believe the GDV will be similar to the existing Durian Tunggal development.
“Hence, the acquisition is expected to increase the GDV for Scientex’s Durian Tunggal development projects to RM800 million,” it said.
TA Securities believed the estimated GDV for the company’s existing Durian Tunggal township was RM400 million, with RM200 million to come from future developments.
Since the unveiling of its maiden township at the end of last year, Scientex has launched 660 units of affordable landed houses, including the 116 units under the Malacca Affordable Housing programme recently.