CIMB Research Starts Coverage Of Sime Darby Property, Target Price RM1.85

CIMB Research Starts Coverage Of Sime Darby Property, Target Price RM1.85 - CIMB Equities Research has initiated coverage of Sime Darby Property (SD Property) with a  target price of RM1.85 and an Add recommendation. Its last traded price was RM1.16.

It said on Friday it had valued the stock based on a 50% discount to its estimate of its realised net asset value (RNAV), translating into a target price of RM1.85. 

“The large discount compared to an average of 35% for the other stocks under our coverage reflects the slower monetisation and longer gestation period of its considerable landbank. 

“We believe the recent share price retracement to 0.8 times FY18F P/BV, which is below peers’, represents a good opportunity to accumulate the stock,” it said. 

CIMB Research said as its valuation does not include the potential value enhancement from the additional landbank of 20,602 acres under the Malaysia Vision Valley (MVV) option agreements and land option agreements.

It sees further upside to its RNAV and target price if SD Property manages to monetise or develop these sites in the future.  

SD Property has the largest landbank in Malaysia as at Sep 2017. Currently, it owns about 20,763 acres of landbank which the research house estimates has a remaining gross development value (GDV) of RM100.4bil. 

The landbank is strategically connected to major highways and located mainly within key growth areas and economic corridors. 

SD Property’s landbank within Negeri Sembilan and Johor is near the Kuala Lumpur-Singapore high-speed rail project (HSR).

As Seremban and Muar have been identified as transit stops along the rail line, the research house believes SD Property’s property projects in the surrounding areas, like Bandar Ainsdale, Seremban, Nilai Impian 1 and Nilai Impian 2 in Negeri Sembilan as well as Bandar Universiti Pagoh in Muar, will benefit from the development.   

SD Property has strategic landbank surrounding the area earmarked as MVV, a component of the government’s 11th Malaysia Plan and the National Transformation Plan.