SkyWorld Dev. Group Bhd [A Step Closer to Penang Affordable Housing]

A Step Closer to Penang Affordable Housing

SkyWorld has acquired a 25.9-acre land in Bandar Cassia, Penang from PDC for RM48.5m. This deal forms part of the phase acquisition agreement with the PDC for total land size of 161.5 acres and paves way for SkyWorld to launch its first affordable housing project in Penang with an estimated GDV of RM849m, targeted for launch in 2HFY26E. Notably, the acquisition cost translates into a land-to-GDV cost of just 5.7%, well below SkyWorld’s historical average of 14-16%. This favourable entry cost should enhance its margin resilience, enabling SkyWorld to better manage input cost fluctuations and preserve profitability across future launches. Despite its strong earnings visibility, SkyWorld’s share price has declined 23% YTD, which we view as unjustified. Valuations remain attractive, with the stock trading at 7.9x FY26 PE and 0.47x PB, both below the sector average of 9.9x and 0.64x respectively. Supported by a solid project launches pipeline and attractive valuation with decent 3.0% net dividend yield, we maintain our “accumulate on weakness” stance. We reiterate our BUY call with an unchanged TP of RM0.64, derived from 65% discount to our estimated RNAV of RM1.84 per share.

Contract details. SkyWorld, via its wholly-owned subsidiary SkyWorld Cassia Development Sdn Bhd (formerly SkyAvana Development Sdn Bhd), has entered into a Sale and Purchase Agreement with Penang Development Corporation (PDC) on 8 July 2025 to acquire a 25.9-acre of land, a parcel within the larger 161.5-acre of land in Bandar Cassia, Seberang Perai Selatan, Penang, for a total purchase consideration of RM48.5m or RM43 psf.

Setting for its Penang affordable housing project. This land parcel acquisition forms part of the phased acquisition agreement with the PDC for a total of 161.5 acres land in Batu Kawan. The staggered acquisition enables SkyWorld to preserve its cash flow and limit upfront capital commitment. This acquisition paves the way for the group to launch its first affordable housing project in Penang (Cassia – Phase 1) with an estimated GDV of RM849m, targeted for launch in 2HFY26E. We view this development positively as it enhances the group’s long-term earnings visibility and expands its presence into a high-demand mass market housing segment in the northern region.

Our takes. We view this acquisition to be attractive, given the purchase consideration of RM48.5m only represent a land-to-GDV cost of approximately 5.7%, which is well below its historical average of 14-16%. The favourable entry cost should enhance its margin resilience, enabling SkyWorld to better manage input cost fluctuations and preserve profitability across future launches. Despite of SkyWorld robust earnings visibility, the stock has underperformed, declining 23% YTD, which we believe is unjustified. Valuation remains compelling, with the stock trading at only 7.9x FY26E PE and 0.47x FY26E PB, versus the broader Bursa Malaysia Property Index at 9.9x PER and 0.64x PB. Given the SkyWorld’s strong project pipeline and attractive valuation with decent net dividend yield of 3%, we reiterate our accumulate on weakness stance

Our earnings forecast maintained. We keep our FY26-27 earnings forecasts unchanged at this juncture, as this land acquisition is within our expectation for SkyWorld’s RM13bn affordable housing project in Penang. No change to our TP of RM0.64 based on a 65% discount to our estimated RNAV of RM1.84 per share. We continue to like SkyWorld for its strong position in the affordable housing segment (cushioned by strong demand and supportive government policy), strong earning visibility backed by robust RM2.2bn GDV project launches pipeline and PPVC adoption to support growth.

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SkyWorld Development Group Berhad (SkyWorld), a property developer that focuses on the development of residential and commercial properties.

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