GAM: Strategic Land Acquisition in Singapore Bolsters Property Pipeline, Buy Rating Affirmed

A leading construction and property group has secured a significant land parcel in Singapore, a move that analysts view as highly positive for its property development portfolio. The acquisition, conducted through a joint venture, is expected to substantially boost the company’s Quick Turnaround Projects (QTP) pipeline and reinforce its strategic presence in the region.

Acquisition Details and Strategic Impact

The company, in partnership with Evia MCIS and H108, emerged as the highest bidder for a leasehold land parcel at Chencharu Close, Singapore. Valued at SGD1 billion (approximately MYR3.3 billion) for the 29.5k sqm site, the provisional tender results were announced following the tender’s closing on September 11. The group holds a 50% stake in the joint venture.

The Chencharu Close site is earmarked for a mixed commercial and residential development with an estimated Gross Development Value (GDV) of MYR6 billion. Located near the Khatib Mass Rapid Transit station, the project is anticipated to yield approximately 875 private homes and potentially integrate a bus interchange and hawker centre. This marks the first Government land sale site in Chencharu to include a private housing component, offering a first-mover advantage in a key growth area.

Enhancing the QTP Portfolio

This new development will be integrated into the group’s Quick Turnaround Projects (QTP) portfolio. As of end-April, the QTP portfolio had an estimated MYR11.5 billion in remaining GDV (effective share). With the Chencharu Close development contributing an estimated MYR3 billion (effective share for the group’s 50% stake), the overall remaining GDV for QTPs is projected to increase by approximately 26% to MYR14.5 billion.

Analysts view the land deal favorably, particularly given that it will be a private condominium. This structure allows for progressive billing to buyers, which places less strain on the balance sheet compared to previous executive condominium projects, such as OLA Residences in Singapore, where lumpy earnings were observed in 3QFY24 due to bullet payments upon delivery.

Outlook and Valuation

While no immediate changes to earnings estimates are expected, pending further concrete details such as the launch timeline (likely in CY26), the long-term outlook remains positive. Despite currently trading at a premium of 23x FY26F P/E compared to the Bursa Malaysia Construction Index’s 10-year mean P/E of 14x, there is perceived room for valuation upside. This potential is attributed to the group’s growing capabilities in data centres and its involvement in renewable energy projects across Australia and Malaysia, which are expected to provide avenues for recurring income growth.

Key Risks

The primary risk identified is a slower-than-expected job replenishment rate, which could impact future growth trajectories.