UEM SUNRISE BHD

By Maybank Investment Bank Research Rating: Buy (maintained)

Target price: RM1.32

MAYBANK Investment Bank Research (Maybank IBR) is positive on UEM Sunrise Bhd’s recent land acquisition in Seri Kembangan, Selangor as it deemed the pricing fair.

UEM inked a sales and purchase agreement with Kemaris Residences Sdn Bhd to buy the 19.24 acres for RM109.5mil cash (RM130.65 per sq ft). The land has already obtained a development order for 924 residential units of apartments. In terms of accessibility, the Equine Park mass rapid transit station, which is currently under construction, is located 1.3km to the south of the new land.

It is nearby to Aeon Taman Equine and Alice Smith International School.

“UEM’s recent land purchase is in line with the management’s strategy in reducing exposure in Iskandar Malaysia and expanding land bank in the Klang Valley and help diversify its geographical spread.

“We are positive on the deal for its relatively lower pricing compared to LBS Bina Group Bhd’s recent land acquisition there at RM181 per sq ft,” Maybank IBR said.

The research house said UEM will develop the land into a high-rise apartment and landed residential project targeting upper-to-mid income property buyers.

“With gross development value of about RM700mil, the land is expected to enhance our revalued net asset valuation per share by one sen. This is on the basis of a 20% pre-tax margin and five-year development period,” the house said.

The shift of focus to the Klang Valley will be positive for UEM over the long term, said Maybank IBR, keeping a “buy” rating on the stock, with a 30% upside in target price of RM1.32.