The proposed deal is expected to be completed by the 4Q22

by LYDIA NATHAN / Pic by TMR FILE PIX

PUBLICINVEST Research has upgraded its call on Malakoff Corp Bhd to ‘Outperform’ following its recent corporate exercise to acquire a 5.8-acre (2.34ha) parcel of industrial land in Klang, Selangor, for RM25 million with Media Prima Bhd through its wholly owned subsidiary Alam Flora Environmental Solutions Sdn Bhd (AFES).

The investment bank maintained its target price at RM1.02 given its share price upside, healthy dividend yield and attraction as a defensive play.

It made no change to its earnings estimates for now as the development plan is expected to take 42 months to complete.

The proposed land acquisition is expected to be completed within 90 days from the unconditional date of the sale and purchase agreement by the fourth quarter of 2022 (4Q22).

The deal was announced after Media Prima said it would buy back its Bangsar property where its headquarters are located from Permodalan Nasional Bhd for RM156.4 million.

PublicInvest Research said the newly acquired land by Malakoff is strategically located adjacent to Northport (M) Bhd, Westports (M) Sdn Bhd and anticipated future development of Pulau Carey Port.

It is accessible from Klang town centre via Jalan Kapar followed by Selat Klang Highway into Lebuh Sultan Mohamed 1 which will lead to the said property.

“We understand that the land will be used by AFES to proceed with the proposed development of an off-site recovery facility to handle various types of waste and to expand its environmental business segment in line with its strategic plan,” the investment bank stated.

The market value of the land was appraised by an independent valuer on Feb 17, 2020, as RM25 million despite the land being purchased by the vendor in 2006 for RM13.3 million.

AFES management believes the assets are expected to be able to accommodate the requirements of the recovery facility with minimal renovation.

“The total development cost for the recovery facility is expected to be RM130 million over 42 months,” said PublicInvest Research.

Malakoff shares closed at 82 sen last Friday, valuing the company RM4.1 billion.