IOIPG: Industrial Land Sale Drives Valuation Upside, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM3.94 (+24.3%) |
| Last Traded | RM3.17 |
| Recommendation |
Major Land Disposal Fuels Optimism
A significant industrial land transaction has underscored robust market demand and prompted a leading investment bank to revise its valuation for a major property group. The sale of 136.0 acres of industrial land in Banting for RM740.7 million to a data centre operator, marking Malaysia’s largest such land sale by value, is viewed as a strategic monetization reflecting premium valuation and strengthening the property group’s industrial park initiatives.
Strategic Monetization and Premium Valuation
The transaction implies an attractive land price of approximately RM125 per square foot, significantly above asking prices in the vicinity (RM50-95 psf) and the industrial park’s own indicative pricing (RM95 psf). This premium is justified by the land’s infrastructure-ready status, strong connectivity to key logistics hubs like KLIA and Port Klang, and its suitability for high-demand data centre developments, where rapid market entry and delivery certainty are crucial. Analysts estimate the deal implies a gross margin of about 60%, with total costs for land and infrastructure at around RM50 per square foot, potentially yielding an estimated net profit of RM338 million after a 24% corporate tax rate. This substantial profit is expected to provide a one-off uplift to the group’s FY27 earnings, projected to be around RM799.3 million, a significant 42% increase. However, earnings forecasts remain unchanged at this juncture, pending greater clarity on completion timing and profit recognition.
Future Growth and Recurring Income Potential
Looking ahead, the property group retains a substantial 186 acres in Banting for further land sales or development. Management has also outlined plans to explore 500,000 square feet of logistics warehousing facilities in Banting and Iskandar Malaysia, potentially under long-term lease arrangements. Beyond Banting, other industrial parks in Melaka (250 acres) and Iskandar Malaysia (1,100 acres), strategically located within the Johor Singapore Special Economic Zone, are progressing through approval stages. These developments are poised to reinforce the group’s industrial expansion and contribute to a gradual build-up of recurring industrial income over time. Furthermore, the group is reportedly moving closer to a planned REIT listing targeted for the third quarter of 2026, which could serve as another valuation catalyst.
Analyst Outlook and Valuation
In light of these positive developments, TA SECURITIES has maintained its Buy recommendation on the property group and has raised its target price to RM3.94 from RM2.78. This revised target price is based on a higher valuation multiple of 0.85x CY26 book value, up from 0.6x previously. The upward revision reflects the clearer value crystallization stemming from the substantial data centre land disposal and the group’s expanding industrial footprint. Despite the revision, the analyst’s applied multiple is considered conservative when compared to peers active in industrial and data centre developments, suggesting further upside potential as execution milestones are achieved.
