SDG: Major Developer Forges Industrial Park JV, Analysts Maintain Buy Rating

A prominent property developer has entered a strategic joint venture to establish a substantial 941-acre industrial park in Kulai, Johor, a move expected to significantly enhance its financial performance and long-term growth trajectory. This development has led analysts to maintain a “Buy” recommendation.

Strategic Joint Venture

The company, through its subsidiary Land Ventures, has signed a subscription and shareholders’ agreement with Permodalan Darul Ta’zim (PDT) and EcoWorld to subscribe shares in Eco Business Park 8 (EBP8). This Special Purpose Vehicle (SPV) is tasked with developing the industrial park on land currently held by the group. The company will hold a 25% stake in EBP8, with PDT and EcoWorld holding 10% and 65% respectively. The share capital will increase to MYR10m, with funding to be sourced from internal funds.

Project Scope and Location

The industrial park is slated for development over 10 years and boasts a preliminary Gross Development Value (GDV) of approximately MYR3.75bn. It will feature a diverse mix of industrial lots, ready-built factories, and commercial properties, targeting high-growth sectors such as E&E, clean technology, and logistics. Its strategic location near the Senai International Airport, major highways, and seaports provides exceptional connectivity and logistical advantages, bolstering its business growth prospects. The land, held under 12 titles and currently planted with oil palms, is situated within Flagship F of the Johor-Singapore Special Economic Zone (JSSEZ), with EBP8 already in the initial stages of development planning.

Expected Financial Impact

Analysts are particularly positive about the project’s financial implications. EBP8 is set to acquire the 941 acres from the group for MYR814.8m, translating to an attractive average selling price of approximately MYR20 per square foot. This price surpasses previous land transactions in Kulai, which typically ranged from MYR12-MYR15 per square foot. As a result, the group is expected to realize a substantial gain of MYR526m (after tax and expenses) which will be recognized in FY26. This is in line with previously assumed annual EBIT contributions of MYR500m from property transactions. Beyond the initial land disposal, the project is also expected to generate recurring property development income, with the group’s share of profits potentially ranging from MYR150-MYR200m over the 10-year development period, based on the MYR3.75bn GDV and an estimated gross profit margin of 30%.

Outlook and Recommendation

The group’s participation in this joint venture aligns with its long-term strategy of developing 2,000 acres of land annually through partnerships. Analysts highlight the group’s attractive valuation, trading at an appealing 16x FY26F Price-to-Earnings (P/E) ratio, which falls at the lower end of its peer group’s range of 16-20x. Consequently, the investment bank maintains its “Buy” recommendation, reflecting confidence in the group’s growth prospects driven by this strategic initiative.