UEM Sunrise Bhd

Buy. Target price:

RM1.60

APART from other factories which are already operating, GDS Holdings, which is a leading developer and operator of data centres, is currently building its data centre campus at Nusajaya Tech Park (NTP). The renowned Paris Baguette (owned by SPC Group of South Korea) is also constructing its first global halal manufacturing plant in Southeast Asia. Management indicated that demand for industrial development picked up rapidly during the US-China trade tensions, and post-Covid-19 reopening further accelerated the decentralisation of operations by many multinational corporations. This trend is in line with UEMS’ other industrial peers, such as AME Elite Consortium (AME MK, BUY, TP: RM2.05), which has similarly experienced strong demand over these few years.

Admittedly, development at NTP was fairly slow in the early stage, but it is now a highly successful industrial park. In Dec 2022, UEMS injected Phases 2 and 3 into the JV as Ascendas decided to expand further. Although the transaction was valued at RM289.2 million for 235 acres (the price was fixed based on certain escalation rate agreed earlier), Ascendas’ move to further expand NTP is a show of confidence. NTP is a green mark industrial park with high security system, and Ascendas, via its strong network and track record, has been able to bring in reputable industrial players into NTP. The factories at NTP are currently fetching RM360-370 psf. Phase 1 of NTP is already almost full, while Phases 2 and 3 are currently undergoing land clearing.

Maintain BUY and RM1.60 TP, 65% upside.