Sime Darby Property well positioned to capitalise on industrial segment
KUALA LUMPUR: Analysts see Sime Darby Property Bhd (Sime Darby Property), to be well positioned to capitalise on its move to push into the industrial segment.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) believed Sime Darby Property is well positioned to capitalise on the industrial segment which is seeing better demand-supply dynamics, with a focus on light industrial and logistics businesses.
“Its unique advantages include strategic and sizable land bank around the Greater Klang Valley region, cheaper land cost from converted agricultural land and relatively robust demand for industrial hubs within close proximity to key transportation hubs,” Kenanga Research said.
The research arm noted that to date, 461 acres of land, circa RM5.1 billion gross development value (GDV), has been identified for industrial development.
It further noted that 18 per cent of the targeted July 2018 to December 2019 launches will be industrials.
“While most will be for sale, some 253 acres in Elmina East, Bandar Bukit Raja 1 and 2 and Serenia City will be used for industrial build-to-suit facilities, which will be retained as recurring income assets.”
According to Kenanga Research, of particular interest is the second quarter of 2018 (2Q18) announcement of Sime Darby Property's 50:50 joint venture (JV) with Mitsui & Co (Mitsui) to develop and lease built-tosuit industrial facilities on a 39 acre site in Bandar Bukit Raja 2, with an estimated GDV of RM530 million.
The research arm highlighted that the objective of the JV is to leverage on Mitsui's expertise in designing logistics facilities while retaining the industrial assets as a recurring income stream.
“The company is looking at more strategic partnerships for its industrial parks development on 253 acre earmarked land in Elmina East, Bandar Bukit Raja and Serenia City.”
Kenanga Research gathered that management is actively looking for more strategic partnerships similar to that with Mitsui to develop and operate more industrial parks.
“While we have yet to factor for other new strategic partnerships with regards to the industrial parks, we are positive on this development as we see it as part of an initiative to monetise their land banks more aggressively while tapping onto a more demandresilient segment.”