KEPONG: Integrated TechPark Initiative Poised to Boost Future Earnings
| Investment Bank | PUBLIC INVESTMENT BANK |
|---|---|
| TP (Target Price) | RM22.72 (+13.8%) |
| Last Traded | RM19.96 |
| Recommendation |
A recent report by PUBLIC INVESTMENT BANK highlights a significant strategic development by a major Malaysian conglomerate, with its wholly-owned subsidiary, KLK Land, launching a substantial integrated industrial hub. The new 1,500-acre KLK TechPark in Tanjong Malim is designed to attract diverse industries, including automotive, logistics, engineering services, and high-tech manufacturing, signaling a positive future outlook for the company.
Strategic Initiative Details
The KLK TechPark project is an ambitious endeavor with an estimated Gross Development Value (GDV) of RM3.5 billion over the next decade. Strategically located near the Automotive High-Tech Valley (AHTV) and boasting direct access to the North-South Expressway, the park offers build-to-suit solutions, industrial plots, and ready-built factories, supported by robust infrastructure. Notably, the world’s largest electric vehicle manufacturer, BYD, has been confirmed as an anchor investor, occupying a 150-acre facility in Phase 1 by the end of 2026. Phase 2, featuring a 200-acre vendor park, is slated for launch by end-2025.
Unlocking Asset Value and Diversification
The investment bank views this initiative as a key factor in unlocking the company’s significant land asset value. Based on industrial land transactions ranging from RM15 to RM55 per square foot, KLK’s 1,500 acres could be valued at approximately RM3 billion, representing about 13.3% of its current market capitalization. Given its prime location and connectivity, the land is expected to command a premium above the estimated RM45 per square foot. This industrial hub is expected to enhance the value of KLK’s remaining land assets over time.
Beyond asset monetization, the TechPark represents a strategic move to diversify income streams. It is expected to reduce the company’s heavy reliance on plantation earnings, with the property segment currently accounting for only 1% of the group’s total earnings. This expansion also broadens the property division’s portfolio beyond existing developments like Bandar Seri Coalfields.
Future Outlook and Earnings Impact
PUBLIC INVESTMENT BANK maintains an Outperform rating on the stock with a consistent SOP-based target price of RM22.72. The new TechPark is projected to contribute an additional 3-5% to the company’s FY26-27F earnings forecasts. This long-term strategic investment underscores the company’s commitment to sustainable growth and enhancing shareholder value through strategic property development and industrial diversification.
