LSH: Strategic Morib Rejuvenation Plan Set to Unlock Multi-Billion GDV Potential
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A significant strategic development is poised to redefine the growth trajectory of a key player in the construction and property sector, following its agreement-in-principle for the ambitious Morib Rejuvenation Project. This project is expected to unlock multi-billion ringgit in gross development value (GDV) and reinforce the company’s asset-light, high-margin operating model.
Strategic Project Wins
The company has formally accepted a letter from Seriemas Resort (SRSB), acting on behalf of PNB Development and the Selangor State, confirming the agreed commercial terms for the Morib Rejuvenation Project. This landmark agreement encompasses several key provisions designed to secure long-term growth and recurring revenue streams.
Under the terms, the company will secure a combined 60-year lease, with renewal options for an additional 40 years, covering a 139-acre golf course. Furthermore, a similar 60-year lease arrangement, also with 40 years of renewal options, has been secured for 5 acres of beachfront land, earmarked for the development and operation of a new clubhouse and hotel apartments. Critically, the agreement also grants exclusive development rights over approximately 150 acres of land, coupled with a 12-year right of first refusal (ROFR) over the remaining 303 acres in the Morib area.
Future Growth Drivers
AmInvestment Bank views this project as a strategic victory that strongly supports the company’s core thesis of achieving structurally higher margins and an asset-light operational framework. The intricate structure of the deal provides the company with several strategic advantages. It ensures long-term control over premium recreational real estate assets through favorable lease agreements, alongside substantial development rights spanning over 600 acres of land (including the ROFR portion), which is critical for realizing multi-billion ringgit GDV potential.
The project is also expected to generate stable recurring income streams from its hospitality and tourism assets, providing robust financial predictability. Moreover, it offers clear future pipeline visibility, effectively doubling the company’s land size under management without requiring significant capital expenditure for the next 12 years. The involvement of state-linked partnerships is also anticipated to significantly enhance the company’s brand equity, positioning it as a preferred partner for future state-led projects, such as IDRISS Selangor.
Investment Outlook
AmInvestment Bank maintains a BUY recommendation for the company, citing its strategic advancement towards high-margin township development and anticipated stable recurring income from its hospitality assets. The bank has set a target price of RM3.00, representing a 29% upside from the current trading price of RM2.32. This target is pegged to 15 times FY27F Price-to-Earnings (PE), reflecting a 0.5 standard deviation premium to the mid-small cap construction’s 5-year average.
