Stock Name: UEMLAND
Company Name: UEM LAND HOLDINGS BHD
Research House: RHB
UEM Land Holdings Bhd
(March 8, RM2.82)
Initiate coverage at RM2.71 with market perform rating and fair value RM2.80: The growth and prospects of UEM Land (ULHB) become particularly more promising after the bilateral agreement between Malaysia and Singapore governments in May last year. The synergistic acquisition of Sunrise in November 2010 is an additional boost in confidence to the investment community on management's execution ability with the entrance of Datuk Tong Kooi Ong into the development committee. Apart from the expected improvement in earnings visibility contributed from Sunrise, more news flow is expected with the strong government's support for promoting the Iskandar Development Region, which is the key economic corridor that the government has put serious emphasis on. Given that ULHB is the largest landowner in Nusajaya, and considering the stock's market cap, liquidity, the recent value-added corporate exercise as well as the government's 'rejuvenation' effort, more eyes are already on the stock, considering the over 60% of subscription of ULHB RCPS as an exit option of Sunrise.
Investment case: (i) The largest property stock by market cap and landbank, and will be the only pure property stock if included into the FBM KLCI 30 Index; (ii) The inclusion of Sunrise will reduce execution risk with RCPS to ensure alignment of interest of Tong with downside being capped; (iii) The entrance of Temasek via the iconic wellness township projects a strong repricing catalyst for land and property values in Nusajaya; (iv) Continued diversification of landbank either via outright acquisition of land parcels or property companies to minimise concentration risk; and (v) Quality of earnings to improve.
Risks and concerns included: (i) external risk that will deter foreign investment interest; (ii) high beta; (iii) regulatory risk; and (iv) country risk.
While Sunrise will contribute 10 months of earnings in FY11, ULHB's earnings in FY12 will reach a tipping point as it will be a crucial year to assess the 'effectiveness' of'' Tong and all projects will be in full swing. Land sales will become more vigorous with more infrastructure and amenities getting ready.
ULHB's share price is highly driven by news flow and correlates with the level of foreign shareholding. We initiate coverage on ULHB with a 'market perform' rating, and fair value of RM2.80, at its revised net asset value(RNAV). News flow on the development of Singapore land parcels will be the key re-rating catalyst, which will potentially raise RNAV per share to RM3.19. ' RHB Research, March 8
This article appeared in The Edge Financial Daily, March 9, 2011.
Company Name: UEM LAND HOLDINGS BHD
Research House: RHB
UEM Land Holdings Bhd
(March 8, RM2.82)
Initiate coverage at RM2.71 with market perform rating and fair value RM2.80: The growth and prospects of UEM Land (ULHB) become particularly more promising after the bilateral agreement between Malaysia and Singapore governments in May last year. The synergistic acquisition of Sunrise in November 2010 is an additional boost in confidence to the investment community on management's execution ability with the entrance of Datuk Tong Kooi Ong into the development committee. Apart from the expected improvement in earnings visibility contributed from Sunrise, more news flow is expected with the strong government's support for promoting the Iskandar Development Region, which is the key economic corridor that the government has put serious emphasis on. Given that ULHB is the largest landowner in Nusajaya, and considering the stock's market cap, liquidity, the recent value-added corporate exercise as well as the government's 'rejuvenation' effort, more eyes are already on the stock, considering the over 60% of subscription of ULHB RCPS as an exit option of Sunrise.
Investment case: (i) The largest property stock by market cap and landbank, and will be the only pure property stock if included into the FBM KLCI 30 Index; (ii) The inclusion of Sunrise will reduce execution risk with RCPS to ensure alignment of interest of Tong with downside being capped; (iii) The entrance of Temasek via the iconic wellness township projects a strong repricing catalyst for land and property values in Nusajaya; (iv) Continued diversification of landbank either via outright acquisition of land parcels or property companies to minimise concentration risk; and (v) Quality of earnings to improve.
Risks and concerns included: (i) external risk that will deter foreign investment interest; (ii) high beta; (iii) regulatory risk; and (iv) country risk.
While Sunrise will contribute 10 months of earnings in FY11, ULHB's earnings in FY12 will reach a tipping point as it will be a crucial year to assess the 'effectiveness' of'' Tong and all projects will be in full swing. Land sales will become more vigorous with more infrastructure and amenities getting ready.
ULHB's share price is highly driven by news flow and correlates with the level of foreign shareholding. We initiate coverage on ULHB with a 'market perform' rating, and fair value of RM2.80, at its revised net asset value(RNAV). News flow on the development of Singapore land parcels will be the key re-rating catalyst, which will potentially raise RNAV per share to RM3.19. ' RHB Research, March 8
This article appeared in The Edge Financial Daily, March 9, 2011.
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