UEM Sunrise sells land in Johor for RM434.3m

The sale of the 67.9ha industrial plot allows AME to develop an integrated industrial park there

by S BIRRUNTHA / pic by BLOOMBERG

UEM Sunrise Bhd inked a deal with AME Elite Consortium Bhd for the sale and development of 72 freehold industrial plots in the third phase of the Southern Industry and Logistics Clusters (SiLC) in Iskandar Puteri, Johor, for RM434.3 million.

The sale of the 67.9ha industrial plot allows AME to develop an integrated industrial park there.

The property developer — through its wholly owned subsidiary, UEM Land Bhd, and its indirectly owned subsidiary, Nusajaya Heights Sdn Bhd — entered into a heads of agreement with AME subsidiaries, Pentagon Land Sdn Bhd and Greenhill SILC Sdn Bhd.

The strategic partnership is expected to generate positive synergies between UEM Sunrise — the landowner and master developer of Iskandar Puteri — and AME, a known specialist in the construction of customised large manufacturing plants, and design-and-build and development of industrial parks.

UEM Sunrise MD and CEO Anwar Syahrin Abdul Ajib welcomed the presence of AME in the expansion of Phase 3 of SiLC, which has shown great success in Phases 1 and 2. He added that UEM Sunrise’s collaboration with AME is among those carefully deliberated.

“Seeing their track record in developing industrial parks, we are confident that we will achieve tremendous results as we move forward with the Iskandar Puteri Development Masterplan,” Anwar Syahrin said in a statement yesterday.

With the sale of the plot, UEM Sunrise will still own more than 4,560ha of land with an estimated gross development value of about RM107 billion.

Among the catalytic developments under the Iskandar Puteri Development Masterplan is the development of integrated industrial parks, in which SiLC forms an integral component.

While SiLC’s Phases 1 and 2 are sold out, the collaboration with AME for Phase 3 to be developed into an integrated industrial park marks a strategic initiative from the company’s standpoint as the partnership allows the company to leverage AME’s extensive expertise and network.

MIDF Amanah Investment Bank Bhd (MIDF Research) in a report said the RM434.3 million land sale is expected to boost new sales of UEM Sunrise’s current financial year (FY20).

The research house said the sales are within the company’s management and its expectations as it targets new sales of RM1 billion, which include land sales for FY20.

MIDF Research stated that UEM Sunrise’s new sales record of RM150.9 million in the first half of 2020 (1H20) was low due to disruption in business activities from the Movement Control Order, while sales in 2H20 are expected to be supported by the Penjana incentives.

“We are not surprised by the land disposal as UEM Sunrise has been actively monetising its landbank in Johor.

“UEM Sunrise had earlier disposed of 164 acres (66.7ha) of freehold land in Mukim Pulai in Johor to Country View Bhd for RM310 million in 2017,” it said.

MIDF Research said the latest land disposal implies a disposal price of RM2.6 million per acre, which is higher than the disposal price of RM1.9 million per acre to Country View due to more strategic location of the land in SiLC Iskandar Puteri.

It also said it made no changes to its earnings forecasts as land sales are within management and its new sales target.

“We maintain our target price for UEM Sunrise at RM0.52, based on a 75% discount to revalued net asset value. We maintain a ‘Buy’ on UEM Sunrise as we expect earnings to return to the black in 2H20.

“Besides, its valuation is attractive as it is trading at a 73% discount to latest net tangible assets of RM1.42 per share,” the report stated.