MB World’s township project to capture spillover effect from RAPID project

KUALA LUMPUR: MB World Group Bhd’s (MB World) township project is set to capture the spillover effect from the growth in the Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, analysts project.

According to the research arm of Hong Leong Investment Bank Bhd (HLIB Research), MB World’s maiden township project, Taman Sri Penawar at Desaru is benefiting from the growth potential and spill-over effects from nearby developments such as the luxury destination resort Desaru Coast, Pengerang Integrated Petroleum Complex (PIPC) and Petroliam Nasional Bhd’s (Petronas) RAPID in Pengerang.

“Bucking the lacklustre trend of overall property market, MB World was able to achieve an overall take-up of more than 80 per cent within a year after the launch of its projects,” it said.

“This is made possible due to the first mover advantage that MB World enjoys, benefiting from the growing spill-over demand from Pengerang coupled with the scarcity of housing supply on the back of growing demand.”

HLIB Research highlighted that besides the key selling point of close proximity to Pengerang and RAPID projects, the location also provides the residences a safe distance from the risk of severe environmental impact and pollution in Pengerang.

“Besides, the project is expected to fetch an attractive rental yield in the range of six to 10 per cent drawing the inference from the rental rate in the neighbour township.”

With a total gross development value (GDV) of RM3.5 billion to be developed for the next 10 years, HLIB Research noted that MB World is a rising property player in Johor.

The research arm further noted that the revenue is expected to rise by three-years compound annual growth rate (CAGR) of 139 per cent in anticipation of continue strong new sales in financial year 2018 (FY18) and FY19, having achieved about RM566 million sales in FY17.

“Other than the completed Pinnacle Tower project in JBCC and the 470 acres of development in Taman Sri Penawar, the company was awarded a development right on a 50 acres land in Teluk Jawa with a planned GDV of RM1.5 billion.”

HLIB Research went on to project that MB World’s earnings will grow by three-year-CAGR of 149 per cent from 2016 to 2019 mainly driven by the good takeup of the ongoing projects.

“The estimated FY18 and FY19 forward price-earnings (P/E) are attractive at 7.4-fold and 6.2-fold, respectively,” the research arm said.