SWB: Strategic Singapore Expansion Fuels Growth, Target Price Lifted

A leading investment bank has reiterated a “Buy” rating for a prominent property group, citing a transformative acquisition and a positive outlook for its expanded presence in the Singapore property market. The analyst has also revised upwards the target price for the company.

Key Acquisition Bolsters Outlook

The positive sentiment is primarily driven by the property group’s recent acquisition of MCL Land, a strategic move poised to significantly enhance its position in Singapore. This acquisition is expected to immediately boost the group’s unbilled sales in Singapore to nearly SGD1.8 billion from SGD614 million. The acquired portfolio, which includes existing retail malls and strategically located land parcels, is well-aligned with the group’s existing assets. This initiative allows the group to undertake projects in Singapore leveraging historical land costs, thereby reducing execution risks often associated with new land tenders. The total cash consideration for the acquisition is approximately SGD738.7 million (MYR2.4 billion), encompassing five key projects in Singapore, a high-occupancy retail mall, and additional land parcels in Malaysia. The acquisition is anticipated to be finalized in 4Q25 and does not necessitate shareholder approval.

Bullish Singapore Strategy and Earnings

The investment bank holds a bullish long-term view on the Singapore property market. Forecasts indicate a substantial increase in 2025 primary residential sales volume, projected to rise by 30-40% year-on-year to reach 9,000-10,000 units. The group plans to concentrate on the mid-to-mid-high segment, targeting average selling prices between SGD2.2k-2.7k psf, with the aim of reinforcing its brand equity in Singapore. A critical aspect of the MCL Land acquisition is its projected role in offsetting any potential earnings decline following the anticipated listing of Sunway Healthcare in early 2026. Three of the five newly acquired Singapore projects are scheduled for completion by the end of 2025, with their accumulated profits, estimated at MYR100 million to MYR130 million, expected to be recognized in FY26F. While the acquisition will largely be debt-funded, potentially leading to a temporary increase in net gearing to approximately 0.55x, this leverage is expected to be managed effectively through the listing of Sunway Healthcare and the realization of profits from the MCL Land projects.

Investment Recommendation

In light of these strategic advancements and a strong future pipeline, the analyst maintains a “Buy” recommendation for the property group. The target price has been raised to MYR6.08, reflecting a 14% upside from the last traded price of MYR5.35. This revised target price also incorporates an 8% ESG premium.