KLK: New Technology Park Initiative to Drive Substantial Earnings Growth

Investment bank analysts are upbeat on a recent property development, identifying it as a significant long-term growth driver. The initiative, centered around a new technology park, is expected to substantially enhance future earnings, with immediate contributions projected from land sales.

Project Details

The focal point of this optimism is the launch of a 1,500-acre integrated technology park. Strategically located near the Automotive High-Tech Valley (AHTV) and offering direct access to major transport routes, the park is designed to foster industrial development and residential support over the next decade.

The first phase of the technology park has already secured BYD as its anchor tenant, covering 150 acres. Construction for BYD’s factory commenced in late August and is slated for completion by the end of 2026. This initial phase involves an outright sale of land, with basic infrastructure provided, and is anticipated to yield substantial immediate profits. Analysts estimate that the land sale to BYD alone could generate MYR100-120 million in profit, contributing an estimated 7-9% to FY26F net profit, driven by the low holding cost of the land.

Future Outlook

Looking ahead, Phase 2, a 200-acre vendor park targeting automotive and manufacturing players, is scheduled for launch by the end of 2025. The entire integrated hub is projected to have a Gross Development Value (GDV) of MYR3.5 billion. Income from future phases is expected to be a mix of disposal gains from land sales and recurring revenue from property development and rentals.

Investment Perspective & ESG

Analysts currently maintain a ‘Neutral’ recommendation for the company, with a target price of MYR21.50, reflecting an 8% upside. The target price incorporates a 4% ESG premium, acknowledging the company’s strong performance with an overall ESG score of 3.2 out of 4, surpassing the country median. The company’s commitment to energy management, sustainability certifications, traceability, fair labor standards, and robust governance practices were highlighted.